Balanced Advantage Funds are a type of Hybrid Funds in which the assets can be allocated to equity or debt instruments dynamically as per the market trends. The equity exposure is lowered down when markets are expensive and the corpus of the debt component is increased.
Best 5 Balanced Advantage Funds
| Fund Name | AUM (Crore) | 1-year Returns | 3-year Returns | 5-year Returns |
| ICICI Prudential Balanced Advantage Fund | ₹24,834 | -10.35% | 1.64% | 5.41% |
| Aditya Birla Sun Life Balanced Advantage Fund | ₹2,357 | -9.61% | -0.33% | 5.73% |
| Invesco India Dynamic Equity Fund | ₹737 | -9.20% | 1.45% | 5.37% |
| Nippon India Balanced Advantage Fund | ₹2,682 | -9.96% | 0.97% | 4.33% |
| HDFC Balanced Advantage Fund | ₹35,118 | -21.59% | -4.30% | 2.70% |
(Source:Value Research, as on May 19, 2020, Best Funds as per 5 Year Return)
1) ICICI Prudential Balanced Advantage Fund
ICICI Prudential Balanced Advantage is an open ended dynamic asset allocation fund that invests in a blend of large cap and mid cap stocks as well as fixed income securities. It is, however, more exposed to equities that aim to raise reasonable returns in various market scenarios but gets more exposed to bonds and debt when markets are overvalued.
| Returns | 1 Year | 3 Years | 5 Years |
| Fund | -10.35% | 1.64% | 5.41% |
| Benchmark | -16.60% | 0.62% | 3.30% |
For instance, if you had invested Rs. 50,000 (either lump amount or via SIP) 5 years ago, then at an expected Rate of Returns (ROI) i.e. around 5.41% as on May 19, the wealth created will be Rs. 65,069.74.
- It invests in AAA and AA rated stocks and bonds majorly and is involved in sectors of Finance, FMCG, Automobile, Energy, Services, Technology, etc.
- Its major holdings include ICICI Bank, HDFC Bank, Axis Bank, Reliance Industries. Infosys, ITC, SBI, NTPC, Bharti Airtel, Larsen & Toubro among many others
- It is for investors with moderate high risk appetite
2) Aditya Birla Sun Life Balanced Advantage Fund
An open ended scheme that seeks to generate long term growth of capital through equities and income distribution through debt and bonds. It is a fund with relatively lower volatility that invests in a dynamically balanced portfolio of Equity & Equity linked investments and fixed-income securities.
| Returns | 1 Year | 3 Years | 5 Years |
| Fund | -9.61% | -0.33% | 5.73% |
| Benchmark | -16.60% | 0.62% | 3.30% |
If you would have invested Rs.50,000 in this fund 5 years ago, the accumulated corpus would have been Rs.66,063.44 (Considering 5.73% CAGR, as on May 19)
- Mohit Sharma keeps an eye on the market and shift allocation of fund corpus from one asset class to another so as to provide optimal returns to the investor
- The fund is invested in sectors of Finance, Energy, Construction, FMCG and others
- HDFC, Reliance Industries, Kotak Mahindra Bank, Coal India Ltd., Housing Development Finance Corporation Ltd. are some of its major holdings
3) Invesco India Dynamic Equity Fund
It is a Dynamic Equity Fund that invests in a mix of equities, cash and debt securities with higher exposure to equities. The fund manager changes the fund allocations among these asset classes as per the demands of the market that makes it relatively safer and less volatile than some other equity fund schemes.
| Returns | 1 Year | 3 Years | 5 Years |
| Fund | -9.20% | 1.45% | 5.37% |
| Benchmark | -16.60% | 0.62% | 3.30% |
If you had invested Rs. 50,000 (either lump amount or via SIP) 5 years ago, then the wealth created today , at an expected Rate of Returns (ROI) i.e. around 5.37% as on May 19, will be Rs. 64,946.37.
- Dynamic allocation of funds not only offer maximum capital gains but also creates a diverse portfolio for the investor and offers flexibility to the fund manager who strategizes the dynamic investment
- It invests in Financial, FMCG, Energy, Construction sectors among many others and the major holdings include Hindustan Unilever, Bajaj Finance, UltraTech Cement, Titan Company,etc.
4) Nippon India Balanced Advantage Fund
The fund corpus of this scheme is invested in equities as well as debt instruments in order to keep a balance between risks and returns. The investment objective of the scheme is to capitalize on the potential upside in equity markets while attempting to limit the downside through bonds and debt instruments.
| Returns | 1 Year | 3 Years | 5 Years |
| Fund | -9.96% | 0.97% | 4.33% |
| Benchmark | -16.60% | 0.62% | 3.30% |
For example, if you had invested Rs. 50,000 (either lump amount or via SIP) 5 years ago, then at an expected Rate of Returns (ROI) i.e. around 4.33% as on May 19, the wealth created will be Rs. 61,803.92.
- Ashutosh Bhargava and Manish Gunwani have effectively managed the Nippon India (earlier Reliance) Balanced Advantage Funds, that believe in lowering the down side risk and creating maximum benefits
- It invests in Finance, Energy, Technology, FMCG, Automobile, etc. and its major holdings are HDFC, ICICI, Tata Power, Tech Mahindra, Bajaj Finserv, etc.
5) HDFC Balanced Advantage Fund
HDFC Balanced Advantage Funds dynamically manage the portfolio through investment in equity & equity related instruments and active use of debt, money market instruments and derivatives in order to give high returns during high volatility.
| Returns | 1 Year | 3 Years | 5 Years |
| Fund | -21.59% | -4.30% | 2.70% |
| Benchmark | -16.60% | 0.62% | 3.30% |
For eg., an investor has invested Rs. 50,000 (either lump amount or via SIP) 5 years ago, then at expected Rate of Returns (ROI) i.e. around 2.70% as on May 19, the wealth created will be Rs. 57,124.48.
- If you are an investor who can be flexible with your corpus being adjusted into equity and debt instruments according to the market conditions, this is a suitable investment option for you
- ICICI Bank, Infosys, State Bank of India, Larsen & Toubro, Reliance Industries are top five equity holdings under the HDFC Fund
- Mr. Prashant Jain has been strategically managing the portfolio of the fund to ensure maximum returns and consistent income. He has incorporated assets into sectors with acceptable valuation such as Finance, Energy, Technology and Construction sector for capital appreciation
Benefits of Balanced Advantage Fund
- Risk-Returns Adjusted
The dynamic asset allocation of the fund corpus helps in reaping benefits of equity while safeguarding it from market volatility as the the fund managers shift the fund into bonds when market valuations go high
- Diverse Portfolio
The dynamic allocation provides flexibility to the managers and also a diverse portfolio diversity to the investors, because the assets are shifted from and to the equity/debt dynamically as per market trends
Also Read: What are Balanced Advantage Funds
How to Invest in Balanced Advantage Funds
You can invest in large and mid cap funds through either of the following ways-
- Offline mode of investing– If you are not confident of your knowledge, you may choose to invest through a broker. However, investing in a fund through a broker will make you eligible for investments through regular plans that offer different returns and varied expenses in investment. If you wish to invest in the fund independently, you must visit the nearest branch of the AMC of your fund. Don’t forget to carry the following documents-
- Identity Proof (Aadhar Card)
- Canceled cheque
- Passport size photos (around 4-5)
- PAN Card
- KYC documents (for KYC verification)
- Online mode of investing– If you do not wish to add on to your expense of commissions or brokerage, you may visit online investment platforms such as Paisabazaar.com wherein you can choose from and compare more than 1,700 funds- all in one place, instead of following the long procedure of visiting the website of each AMC and then choosing from them. Here, you can select the fund in which you want to invest, look at the details and compare similar schemes as well as use SIP Calculator or Lumpsum Calculator to estimate the future value of your investment
For detailed information on how to invest in mutual funds, click here
Frequently Asked Questions (FAQs)
Q. Are Balanced Advantage Funds and Balanced Funds the same?
A. No, they are not. Balanced Funds have a fixed ratio of balanced investments in equity and debt, as in 40-60% ratio whereas the Balanced Advantage Funds can dynamically shift the funds between equity and debt as per market conditions. They have about 33% corpus in equity, 33% in arbitrage and rest in debt.
Q. Are Balanced Advantage Funds safe?
A. They are safe and relatively less risky as they come with the advantage of shifting between different assets. They have the potential to give higher returns than debt funds, are marketed at lower risk than pure equity funds and also qualify as Equity Funds for tax purposes. However, it has some associated risks as it may under perform and is suitable for moderate risk appetizers.
Q. Have Balanced Advantage Funds delivered good returns?
A. It is a good option for investors wanting higher returns than debt funds or looking for less risky substitute of equity funds but investors who expect assurance of regular income may get disappointed. Financial experts are skeptical about the credit quality of debt components. Also, the expense ratio is higher than other hybrid funds or balanced funds in 50:50 allocation.