A good choice for first-time investors
Individuals are looking at balanced advantage funds for incremental investments as these funds have been able to navigate market volatility effectively and have delivered superior risk-adjusted returns. Since July this year, these hybrid funds have seen net inflows after nine consecutive months of net outflows. These invest in a mix of stocks and debt instruments, based on a dynamic asset allocation process.
During phases of market volatility, indecisive investors tend to favour balanced advantage funds, effectively outsourcing asset allocation decisions to well-equipped investment teams. Moreover, the pause in the Reserve Bank of India’s (RBI’s) interest rates coupled with rising market valuations have prompted investors to switch some of their investments from pure equity to balanced advantage funds.
In H1FY24, hybrid schemes as a category saw net inflows of Rs 62,174 crore, of which Rs 43,455 crore were into arbitrage funds, Rs 11,830 crore into multi-asset allocation funds, and Rs 3,486 crore into balanced advantage funds, data from Association of Mutual Funds in India show.
Nirav Karkera, head, Research, Fisdom, says the flexibility to manage asset allocation as per market cycles offers balanced advantage funds a distinct edge, especially during times of heightened volatility. “Now is, in fact, an ideal period to invest in such funds to ensure asset allocation strategies are optimised for the volatility and market cycles in a nimble manner. This also ensures that such dynamic management does not entail incremental costs on account of tax and load,” he says.
Similarly, Arun Kumar, VP and head of Research, FundsIndia, says some of the new incremental money meant for equities may be coming into balanced advantage funds
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