Balanced Advantage mutual funds invest in equity and debt. These are also called as dynamic asset allocation mutual funds. Many experts recommend these funds, saying these are safe investment options and provide higher returns compared to fixed deposits. What are balanced advantage mutual funds and how do they really work? In this article we would provide some of the Best Balanced Advantage mutual funds to invest in 2021 in India for the medium to long term. We would also discuss whether these are safer investment options or not.
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What are Balanced Advantage Funds?
Balanced advantage fund is the dynamic asset allocation fund. Such schemes dynamically manage equity and debt part based on the market conditions. The fund manager would have their own ratios and formulas to manage such investments dynamically. When stock markets are higher or overvalued, such funds would have lower exposure in equity and vice versa.
How we filtered these Best Balanced Advantage mutual funds in India to invest in 2021?
Here are the list of parameters which we considered in short listing the balanced advantage mutual funds to invest in India.
1) We considered best performing Balanced Advantage funds in the last 10 years, 5 years, 3 years and 1 year.
2) We have short listed funds that performed well during various market cycles in the last 3-10 years.
3) These funds have Assets under Management as > Rs 500 Crores.
Best Balanced Advantage Mutual Funds to invest in 2021
Here are the list of Balanced Advantage mutual funds invest in India for medium to long term.
#1 – ICICI Prudential Balanced Advantage Fund
# 2 – HDFC Balanced Advantage Fund
#3 – Nippon India Balanced Advantage Fund
#4 – Edelweiss Balanced Advantage Fund
#5 – Aditya Birla Sun Life Balanced Advantage Fund
Now let us see the reasons why we need to invest in these Balanced Advantage mutual funds now in 2021.
#1 – ICICI Prudential Balanced Advantage Fund
What is this Fund Investment Strategy?
The scheme seeks to provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments.
How is the performance of this Balanced Advantage mutual fund?
This fund has outperformed and gave 12% annualized returns in the last 10 years, 9% annualized returns in the last 5 years and 10% annualized returns in the last 3 years. In the short term, it gave 13% returns in the last 1 year and 9% returns in the last 6 months.
This fund gave highest SIP returns. If one would have done SIP for Rs 1,000 per month for 10 years, the investment would have been Rs 1.2 Lakhs and such fund would have now grown to Rs 2.2 Lakhs. Similarly, if one would have invested Rs 1,000 per month for 5 years, the investment would have been Rs 60,000 and such amount would have now grown to Rs 75,000.
Why should you invest in this Balanced Advantage fund?
This fund has given 11% annualized return since inception. This fund has 0.44 Beta which indicates low volatility compared to benchmark. Considering its long standing performance in the last 5-10 years, this can be considered as one of the best Balanced Advantage mutual fund to invest in 2021.
# 2 – HDFC Balanced Advantage Fund
I keep getting comments on the blog saying โIs it good to invest in HDFC Balanced Advantage Fund?โ Let’s review now.
What is this Fund Investment Strategy?
The Scheme seeks to provide long term capital appreciation / income from a dynamic mix of equity and debt investments.
ย How is the performance of this Balanced Advantage mutual fund?
This fund has outperformed and gave 12% annualized returns in the last 10 years, 8% annualized returns in the last 5 years and 7% annualized returns in the last 3 years. In the short term, it gave 10% returns in the last 1 year and 5% returns in the last 6 months.
This fund gave highest SIP returns. If one would have done SIP for Rs 1,000 per month for 10 years, the investment would have been Rs 1.2 Lakhs and such fund would have now grown to Rs 2.1 Lakhs. Similarly, if one would have invested Rs 1,000 per month for 5 years, the investment would have been Rs 60,000 and such amount would have now grown to Rs 75,000.
Why should you invest in this Balanced Advantage fund?
This fund has given 18% annualized return since inception. This fund has 1.01 Beta which indicates volatility is in line with the benchmark. Considering its long standing performance in the last 5-10 years, this can be considered as one of the top performing Balanced Advantage mutual fund to invest in India.
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#3 – Nippon India Balanced Advantage Fund
What is this Fund Investment Strategy?
The scheme seeks to capitalize on the potential upside in the equity markets while attempting to limit the downside by dynamically managing the portfolio through investment in equity & equity related instruments and active use of debt, money market instruments and derivatives.
How is the performance of this Balanced Advantage mutual fund?
This fund has outperformed and gave 11% annualized returns in the last 10 years, 7% annualized returns in the last 5 years and 9% annualized returns in the last 3 years. In the short term, it gave 11% returns in the last 1 year and 7% returns in the last 6 months.
This fund too gave highest SIP returns. If one would have done SIP for Rs 1,000 per month for 10 years, the investment would have been Rs 1.2 Lakhs and such fund would have now grown to Rs 2.1 Lakhs. Similarly, if one would have invested Rs 1,000 per month for 5 years, the investment would have been Rs 60,000 and such amount would have now grown to Rs 75,000.
Why should you invest in this Balanced Advantage fund?
This fund has given 16% annualized return since inception. This fund has 0.9 Beta which indicates low volatility compared to benchmark. Considering its long standing performance in the last 8-10 years, this can be considered as one of the Top 5 Balanced Advantage funds to invest in 2021.
#4 – Edelweiss Balanced Advantage Fund
What is this Fund Investment Strategy?
The scheme will invest in arbitrage opportunities, equity derivative strategies, pure equity investments and the balance in debt and money market instruments.
How is the performance of this Balanced Advantage mutual fund?
This fund has outperformed and gave 10% annualized returns in the last 10 years, 7% annualized returns in the last 5 years and 9% annualized returns in the last 3 years. In the short term, it gave 12% returns in the last 1 year and 9% returns in the last 6 months.
If one would have done SIP for Rs 1,000 per month for 10 years, the investment would have been Rs 1.2 Lakhs and such fund would have now grown to Rs 1.95 Lakhs. Similarly, if one would have invested Rs 1,000 per month for 5 years, the investment would have been Rs 60,000 and such amount would have now grown to Rs 73,000.
Why should you invest in this Balanced Advantage fund?
This fund has given 10% annualized return since inception. This fund has 0.73 Beta which indicates low volatility compared to benchmark. It is one of the best balanced-advantage fund to invest in 2021.
#5 – Aditya Birla Sun Life Balanced Advantage Fund
What is this Fund Investment Strategy?
The Scheme seeks to generate long term growth of capital and income distribution with relatively low volatility by investing in a dynamically balanced portfolio of Equity & Equity linked investments and fixed-income securities.
How is the performance of this Balanced Advantage mutual fund?
This fund has outperformed and gave 10% annualized returns in the last 10 years, 8% annualized returns in the last 5 years and 7% annualized returns in the last 3 years. In the short term, it gave 11% returns in the last 1 year and 7% returns in the last 6 months.
If one would have done SIP for Rs 1,000 per month for 10 years, the investment would have been Rs 1.2 Lakhs and such fund would have now grown to Rs 2 Lakhs. Similarly, if one would have invested Rs 1,000 per month for 5 years, the investment would have been Rs 60,000 and such amount would have now grown to Rs 74,000.
Why should you invest in this Balanced Advantage fund?
This fund gave 11% annualized return in the last 10 years. This fund has 0.45 Beta which indicates low volatility compared to benchmark. Considering its long standing performance in the last 5-10 years, this can be considered as one of the top 5 balanced advantage mutual fund in 2021 to invest in India for the long term.
Performance, Ratings and Expense Ratios of these Balanced Advantage Funds
Some FAQs about Balanced Advantage mutual funds
1) Which is the best balanced advantage fund?
Based on the long term performance, ICICI Prudential Balanced Advantage Fund is one of the top balanced advantage fund that gave 12% annualized returns in the last 10 years. Even in the short term of 1 year, it has beater its peers and gave 13% returns.
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2) Which is the best balanced advantage fund as per Value research?
Based on value research ratings, below are the top funds which have 3 star to 5 star rating.
i) ICICI Prudential Balanced Advantage Fund – 5 Star
ii) Aditya Birla Sun Life Balanced Advantage Fund – 4 Star
iii) Edelweiss Balanced Advantage Fund – 3 Star
3) Are Balanced Advantage Funds Safer like FDs?
There was mis-selling happened a few years back from mutual fund advisors and bank managers to many investors saying these are safe investment options compared to bank FD and can give higher returns. While this is true to some extent, the extent of risk depends on how much exposure fund has in the equity is the question. Higher the equity exposure, higher the risk and vice versa. We would NOT advise you to consider this as an alternative or better option than FD. However, these funds are less riskier compared to equity mutual funds.
4) Who can invest in Balanced Advantage Funds?
If you are moderate to high risk taker and expecting 8% to 10% annualized returns and willing to invest for 5-10 years either through SIP or a lump sum, you can invest in these mutual funds.
Disclaimer: These Balanced Advantage funds do not offer guaranteed returns. Past performance may or may not repeat in future.
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Good analysis (KPS).T.Q.What is the difference between HDFC BAL.ADV.Fund (Direct-Gr) & HDFC BAL.ADV Fund Direct-Gr(Adjusted NAV).reply.
Hello Udayakumar, The adjusted NAV would come into picture only for dividend options as dividend option should not show wrong picture about returns of the funds. e.g. Rs 100 on day-1 and after day 365 it is 110. But it paid dividend of 9. The fund value is 101. If someone looks at NAV it would show as if it moved from 100 to 101 and 1% returns. But in reality it generated 10% returns. Hence mutual funds would adjust the returns and NAV would remain same. They indicate this as adjusted NAV.
Thanks Suresh for this valuable and fruitful sharing. you have all the basic details that was needed to be covered. It will really help the reader still who is having a zero knowledge of investment.
Thank you
Good Analysis KPS (as always). From the Dividend point of view, HDFC stands #1 preference, as the monthly Div is Rs0.31/unit. What this means is that if i invest 1Lac, i will get approx Rs1200/month as dividend. This is significantly higher than any others in the above list of funds in this category. Do you agree? Please check. I want to co-relate my observation with yours.
Venghat, which HDFC mutual fund you are referring here?