Among the hybrid schemes, Dynamic Asset Allocation/Balanced Advantage Funds have recorded the highest inflow in the month of November 2021. According to the data of the Association of Mutual Funds in India (AMFI), this fund category has recorded a positive inflow of Rs. 6,094.03 Cr. For the month of November 2021, these funds have also recorded the highest Net Assets Under Management of Rs. 1,64,657.92 Cr and Average Net Assets Under Management of Rs. 1,67,724.03 Cr. These statistics may show us why Balanced Advantage Funds are a solid pick during market downturns. But first, let's look at why you should invest.
Aggressive long-term investors who want to invest in equity for higher returns while limiting their losses in the event of a market downturn can invest in balanced advantage funds to create long-term wealth by reducing their risk by not investing in pure equity funds. Under the Hybrid Mutual Fund category, Balanced Advantage Funds, also known as Dynamic Asset Allocation Funds have a blend of Equity and Debt asset class and based on market fluctuations these funds adjust their asset allocation which results in a well-diversified portfolio for you to make risk-adjusted returns in the market downturn or volatile market.
Investing in these funds can provide long-term growth and may outperform inflation owing to the existence of equity stocks, as well as a reduction in absolute risk from market volatility due to the presence of debt stocks, which can provide a cushion against equity. As a result, when it comes to controlling turbulence in various market circumstances, investing in balanced advantage funds is a good choice for limiting your risks to deal with a chaotic market.
Because these funds are dynamic in nature, the fund managers deal with volatility by purchasing stocks at low premiums and selling them at higher valuations. Without having pure equity or debt funds, this strategy improves your portfolio stability. These funds use the price to book (P/B) method to analyse undervalued stocks that may have the potential to rise in terms of market value.
The value of net assets in a company's books of accounts or balance sheet is known as book value. We may calculate a company's book value by subtracting its liabilities from its physical assets. When it comes to picking undervalued stocks, the P/B ratio is more useful than the P/E ratio. And to determine the allocation of stock values among shareholders once a company has cleared its liabilities, the P/B ratio and book value plays an important role.
In discussing the P/B ratio, it is important to note that because balanced advantage funds employ the P/B ratio approach, these funds choose stocks having strong growth potential. According to the data of ICRA in the 3rd quarter of 2021 balanced advantage funds have returned 10.14 percent in the previous six months, 26.1 percent in the previous year, 11.37 percent in the past three years, 9.74 percent in the past five years, and 12.15 percent in the past 10 years. These returns should not be your only consideration to invest in, however, what you can do is you can diversify your portfolio with 5-star rated balanced advantage funds which we have picked below and enjoy your wealth journey without fear of the market crash.
However, I would advise our readers not to solely rely on high-rated funds; instead, they should compare the performance of the fund with that of benchmark and consider expense ratio, portfolio turnover ratio, holdings, risk level, exit load, and other factors in order to invest wisely in mutual fund schemes.
Baroda Dynamic Equity Fund Direct - Growth
As of September 30, 2021, this Dynamic Asset Allocation mutual fund scheme has Rs. 1,580 crores in assets under management (AUM) and a Net Asset Value (NAV) of Rs 16.97 as of December 24, 2021. Value Research has given the fund a 5-star rating and it has an expense ratio of 0.8 percent, which is more than other funds in the same category. The fund currently has a 43.30 percent equity allocation, 28.5 percent cash, and 28.2 percent debt exposure.
Baroda Dynamic Equity Fund Direct-Growth returned 17.85 percent in the last 1-year and it has returned an average of 18.52 percent every year since its inception, according to Groww. The fund has its equity allocation across the Financial, Technology, Energy, Metals, Healthcare sectors. GOI, Infosys Ltd., ICICI Bank Ltd., Reliance Industries Ltd., and HDFC Bank Ltd. are the fund's top five holdings. SIP in this fund can be started with a minimum amount of Rs. 500.
Edelweiss Balanced Advantage Fund Direct-Growth
Value Research has also given this fund a 5-star rating, and SIPs can be started with as little as Rs 500. As of 30 September 2021, Edelweiss Balanced Advantage Fund Direct-Growth has Rs. 6,586.29 crores in assets under management (AUM) and a Net Asset Value (NAV) of Rs. 38.61 crores as of 24.12.2021. The fund has a 0.46 percent expense ratio, which is lower than most other Dynamic Asset Allocation funds. The fund currently has a 59.9% equity allocation, a 20.90% debt allocation, and a 19.2 percent allocation towards cash derivatives.
Edelweiss Balanced Advantage Fund Direct-Growth returns in the previous year were 20.36 percent, according to Groww. It has returned an average of 13.25 percent every year since its inception. The Financial, Technology, Energy, FMCG, and Automobile sectors are all represented in the fund's equity allocation. GOI, Reliance Industries Ltd., ICICI Bank Ltd., Infosys Ltd., and HDFC Bank Ltd. are the fund's top five holdings.
Kotak Balanced Advantage Fund Direct - Growth
This Dynamic Asset Allocation mutual fund scheme has Rs. 12,256.08 Crores worth of assets under management (AUM) as of 30/09/2021 and has a Net Asset Value (NAV) of Rs. 14.8930 as of 24th December 2021. The fund has a 0.45 percent expense ratio, which is lower than most other funds in the same balanced advantage category. The fund currently has a 78.25 percent equity allocation and a 21.75 percent debt exposure.
As of December 26th, 2021, this fund has generated 14.48 percent in the previous year and has given an average yearly return of 12.45 percent since its inception. Kotak Balanced Advantage Fund Direct-Growth has been rated 5-star by Value Research and has equity allocation across Financial, Services, Metals, Technology, Energy sectors. The fund's top 5 holdings are Kotak Liquid Plan A - Growth, GOI, ICICI Bank Ltd., Reliance Industries Ltd., Adani Ports and Special Economic Zone Ltd. One can start SIP in this fund with a minimum monthly contribution of Rs. 1000.
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