Balanced Advantage Funds | Stay Ahead of Market Volatility

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Balanced advantage funds are a class of hybrid funds that invest in both equity and fixed-income securities.It adjusts the asset allocation depending on the market conditions to offer both growth and stability. Should you invest in balanced advantage funds?

What are balanced advantage funds?

You have balanced advantage funds, also called dynamic asset allocation funds, as a category of hybrid mutual funds. It was introduced by SEBI, the capital market regulator, in October 2017.

Balanced advantage funds are a dynamically managed investment that puts your money in a mix of stocks and fixed income instruments without any minimum exposure limits. You have the fund manager changing the asset allocation depending on market conditions to generate an optimum return with minimum risk for the investors.

Should you invest in balanced advantage funds?

You may consider investing in balanced advantage funds only if you have a time horizon of at least five years. You can invest in balanced advantage funds if this is your first time in the stock market.

You have balanced advantage funds increasing equity exposure to as high as 80% to take advantage of undervalued stock markets. You will find balanced advantage funds generating significant returns when the stock markets bounce back.

You also have balanced advantage funds reducing equity exposure to as low as 30% and increasing debt allocation when the stock markets are overvalued. It protects the gains of the fund even if the stock markets crash after some time.

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