An aggressive balanced advantage fund, or conservative? Take your pick
Mint has reviewed the top five balanced advantage funds—from HDFC Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, Edelweiss Mutual Fund, and Axis Mutual Fund. Our review focuses on how these funds have performed over the past three years, their risk-management strategies, net equity levels, and their unique models. With assets under management (AUM) of ₹84,676 crore, HDFC BAF is one of the largest funds in its category.
The fund’s model focuses on valuations and macroeconomic factors to make asset allocation decisions. Historically, HDFC Balanced Advantage Fund has maintained a static asset allocation model, and refrained from using derivatives, to maintain its net equity exposure below 65%. In July 2021, HDFC BAF had an equity exposure of 67%, but by October it had dropped to 59%.
After the 2022 market correction, HDFC AMC raised its net equity exposure to 65% in July that year, higher than its peers. “This equity-oriented fund aims to provide a balanced solution, with a potential for growth typically associated with equities, coupled with the stability of debt instruments," said Gopal Agrawal, senior fund manager, HDFC Mutual Fund. HDFC AMC’s aggressive asset allocation and value-oriented approach didn’t give huge results during 2018-21.
During that time, its rolling return was just 9.51% (May 2018 to May 2021). However, from May 2021 to May 2024, the fund has delivered an average rolling return of 20.23%, beating all its peers. Currently, however, it has taken a more conservative stance than peers, dropping its net equity exposure to 53%, the lowest in its history.
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