5 points first-time investors should know about Balanced Advantage Funds

financialexpress.com:

The net AUM of Balanced Advantage Funds (BAFs) reached over Rs 2.14 lakh crore as of September 30, according to AMFI data. The BAFs have seen increased net inflows since July 2023 as investors have turned to them seeking stable returns.

Investing in a mix of equity and debt instruments, BAFs have also emerged as a popular choice for new investors who do not want to take too much risk while entering the mutual fund market. That said, here’s a look at five important points first-time investors should know about BAFs.

1.Hybrid funds: Balanced Advantage Funds, also known as Dynamic Asset Allocation Funds, are hybrid funds that invest in a mix of equity and debt instruments, helping investors navigate market volatility effectively. The bulk of asset allocation work in BAFs is done by the asset management company.

2.Advantage: In times of market volatility, many investors tend to move some of their funds from pure equity schemes to BAFs. According to experts, BAFs enjoy the flexibility to manage asset allocation as per market cycles. This provides a distinct edge to these funds, especially during times of heightened volatility.

Also Read: Is it better to start a mutual fund SIP at the top or bottom of the market cycle?

3. 5 Top-performing BAFs in 10 years: BAFs have delivered superior risk-adjusted returns. The following are 5 best-performing BAFs in 10 years as per AMFI website data till October 16, 2023:

4. Stable returns: As seen above, BAFs have given steady returns, making them popular among investors exploring hybrid options. Steady returns from BAFs have led many investors to make a switch, more so because returns from the equity funds in the first half of the year were flat. Experts say that BAFs have the potential to