Dynamic asset allocation funds: Why are they most sought-after hybrid mutual funds? MintGenie explains

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wealth creation and fixed income instruments for assured returns. But what would you do if you want considerable wealth creation along with safety of funds?One advisable way is to opt for hybrid mutual funds, which invest in a mix of debt and equity. Between hybrid funds, there are a number of sub-categories as well such as conservative hybrid funds, multi asset funds, equity savings funds and aggressive funds based on their equity allocation.

One sub-category, among hybrid funds, which one of the most popular and highly recommended is that of dynamic asset allocation funds or balanced advantage funds. ALSO READ | These seven value mutual funds beat benchmark index in past 10 years. Should you invest?Balanced Advantage Funds refer to the schemes which invest in a blend of securities and fixed income instruments.

The allocation of equity and debt is managed dynamically (i.e. 0 to 100 per cent in equity & equity-related instruments and 0 to 100 percent in debt instruments), as per the Sebi’s categorisation of mutual fund schemes. These schemes keep changing their allocation based on the market conditions in order to give optimal returns with minimal risk.

These are also referred to as dynamic asset allocation funds.In the entire mutual fund universe, there are 33 schemes in the category of balanced Advantage Funds with total assets under management amounting to ₹2.56 lakh crore. This number is highest among all other categories of hybrid schemes. This is closely followed by balanced hybrid funds which are 31 in number with total AUMs of ₹2.02 lakh crore.