Systematic Investment Plan (SIP) is nothing but to have a well-diversified portfolio to protect against the unpredictable market where Indian stock market share prices are at an all-time high. Whenever the Nifty or Sensex falls dramatically, all we have to do is diversify our equity portfolio with debt funds, with a plan to cushion the risk with debt allocation while benefiting from the equities in a bull market. Only if you have a long-term financial objective should you invest in dynamic asset allocation or balanced advantage funds in the midst of the Indian stock market's record high.
Balance Advantage Funds, also known as Dynamic Asset Allocation Funds that invest in a combination of equities and debt securities which results in a long-term wealth from equity and a cushion of fixed income from the debt exposure. It is a year-round fund that offers the stability of returns and outperforms in turbulent markets. In the bear market, Dynamic Asset Allocation funds expand their allocation to equities, but in the bull market, the same funds enhance their allocation to long-term debt, excelling throughout your investment period. For investors who wish to build long-term wealth with a combination of debt and equity, we've selected two 5-star rated Balanced Advantage Funds that strike a combination between risk and return against pure equity and debt funds.
Edelweiss Balanced Advantage Fund Direct-Growth
This fund is a medium-sized fund of its category and has been in performance for the last 8 years. The fund has a 0.44 percent expense ratio, which is lower than most other funds in the same category. The fund currently has a 59.90 percent equity allocation and a 20.90 percent debt exposure. According to Value Research, Edelweiss Balanced Advantage Fund Direct-Growth returns over the previous year were 36.51 percent, with an average annual return of 13.73 percent since launching.
The fund has a major equity allocation across the Financial, Technology, Energy, FMCG, and Metals sectors. ICICI Bank Ltd., HDFC Bank Ltd., Infosys Ltd., Reliance Industries Ltd - PPE, GOI are the fund's top five holdings. The fund has been rated 5-star by Value Research and also by Morningstar which indicates the performance quality of the fund. As of 4th October 2021, the fund has a Net Asset Value (NAV) of Rs 38.99 and the Asset Under Management (AUM) of the fund is Rs 5,303.54 Cr. The fund has an exit load of 1% if purchased units more than 10% are redeemed between 1 year of the investment date. With a minimum monthly contribution of Rs 500 only, you can start SIP in this fund.
Kotak Balanced Advantage Fund Direct - Growth
Kotak Balanced Advantage Fund Direct-Growth is a Dynamic Asset Allocation mutual fund scheme introduced by the fund house Kotak Mahindra Mutual Fund in 2018 and has been in operation for three years. It is a medium-sized fund among its category, with an expense ratio of 0.49 percent, which is lower than the expense ratio charged by most other Dynamic Asset Allocation funds. The fund now has a 34.00 percent equity allocation and a 26.90 percent debt exposure. According to Value Research, Kotak Balanced Advantage Fund Direct - Growth's 1-year returns were 24.02 percent, and it has generated 13.53 percent average annual returns since its inception.
The financial, metals, technology, services, and energy sectors make up the majority of the fund's equity holdings. As of now, the fund's best-performing holdings are Kotak Liquid Plan A - Growth, GOI, Bharti Airtel Ltd., ICICI Bank Ltd., Adani Ports, and Special Economic Zone Ltd.. Value Research has given the fund a 5-star rating, while Morningstar has given it a 4-star rating, indicating that the fund's potential to generate good returns is comparable to that of other funds in its category. The fund's Net Asset Value (NAV) is Rs 14.96, and its Asset Under Management (AUM) is Rs 10,688.09 Cr as of October 4, 2021.
If purchased units are redeemed within one year of the investment date, the fund charges a 1% exit load. The fund's average credit grade is AAA, and its three-year annualised return exceeds the benchmark -NIFTY50 Hybrid. With a minimal investment of Rs 100, one can begin a systematic investment plan with this fund.
Best Dynamic Asset Allocation Funds To Invest In 2021
Based on the 5-star rating of Value Research and past performance of 3 years, here we have selected 2 best performing balanced advantage funds that you can consider investing in 2021.
|Funds||1 mth returns||6 mth returns||1 yr returns||3 yr returns||5 yr returns|
|Edelweiss Balanced Advantage Fund Direct-Growth||0.83%||14.24%||36.51%||18.84%||14.56%|
|Kotak Balanced Advantage Fund Direct-Growth||0.77%||9.80%||24.02%||15.20%||13.53%|
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