Is it the right time to invest in Balanced Advantage Fund?

09 Nov 2023

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Is it the right time to invest in Balanced Advantage Fund?

Indian investors are contending with volatile markets owing to a complex geopolitical situation. In such volatile times, Investors with long-term investment horizon may want to explore a scheme that adapts their portfolio to align with evolving market conditions. This is where Balanced Advantage funds (BAF) come in.

What BAF offer

BAF are hybrid mutual funds that dynamically allocate investible corpus between equity and debt instruments based on changing market conditions.

BAF have been relatively successful in navigating market downturns. This was witnessed most recently during the pandemic crisis when equity markets slumped sharply.

For illustration, Baroda BNP Paribas Balanced Advantage Fund (Growth) has been considered which declined by only 21% during the pandemic even as the BSE Sensex fell by 38%.

Date Baroda BNP Paribas Balanced Advantage Fund - Growth S&P BSE SENSEX
13-Jan-20 11.49 41,953
23-Mar-20 9.10 25,981
Decline -21% -38%

Benefits of Investing in BAF   

1. Dynamic Asset Allocation:

Periodic adjustment of asset allocation based on changing market conditions.

2. Risk Management:

Aims to reduce drawdowns compared to pure equity funds by actively allocating between debt and equity.

3. No need to time the Market:

Since the fund actively allocates between debt and equity as per changing market conditions, there is no need for investors to time the market.

4. Tax Efficiency:

Gains from Balanced Advantage Fund (with 65% equity) enjoy equity tax treatment, enhancing overall post-tax return.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.

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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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