In volatile markets, wouldn’t it be ideal to have an investment that dynamically adjusts asset allocation between equity and debt, offering the best of both worlds? Balanced advantage funds (BAFs) are designed to do just that — providing equity-like returns while minimizing short-term fluctuations, making them an excellent choice for conservative and first-time investors.
As of January 2025, data from the Association of Mutual Funds in India (AMFI) reveals that 34 balanced advantage funds collectively managed Rs 4.08 lakh crore in assets, with 50.90 lakh investor folios. In last 3-months, BAFs accounted for nearly one-fourth of all net inflows into hybrid funds.
Balanced advantage funds performance in last 3 months
Almost all balanced advantage funds have delivered zero to negative returns in the last 3 and 6 months. These funds have grown by 0.5% to (-)16.5% in the last 3 months.
In the last three months, mutual funds across categories have witnessed sharp declines, with smallcaps plunging up to (-)17%. Smallcap funds have logged (-)10% to (-)17% growth in the last three months. There are similar stories in the midcap and largecap verticals. Midcap funds have clocked a negative growth in the range of (-)8% to (-)14.5%. While largecap funds grew by (-)1.32% to (-)12.45% in the last 3 months.
Also read: Index Fund Vs ETF: Which one can make you more money?
While the last three-month performances of balanced advantage funds do not show they have performed better than other fund categories, experts would still suggest these funds over other categories of equity funds as the latter exposes investors to greater risks due in volatile markets.
Why choose balanced advantage funds?
Optimized Returns & Stability: BAFs actively adjust between equity and debt to ensure consistent growth while reducing volatility.
Tax Efficiency: These funds enjoy the tax benefits of equity mutual funds, making them a tax-efficient investment option.
Proven Performance in Uncertain Markets: BAFs are designed to perform well across different market conditions, offering a balance of growth and capital protection.
“Hybrid products are ideally suited for investors who want to take a calibrated approach to equity exposure. By their very nature, Hybrid products tend to do well during volatile times,” said Sanjay Chawla, Chief investment officer – Equity, Baroda BNP Paribas MF.
Take a look at a case study of Baroda BNP Paribas Balanced Advantage Fund presented by Baroda BNP Paribas asset management firm in a release.
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