Top 5 Best Balanced Advantage Mutual Funds for 2024 – Introduction
The stock markets are currently at their peak, leaving investors confused about where to allocate their funds. In such high-market scenarios, Balanced Advantage funds, also known as dynamic asset allocation mutual funds, comes as a strategic investment option. These funds navigate both equity and fixed-income asset classes, adjusting their allocations based on market conditions. Whether the market is soaring or in a downturn, Balanced Advantage funds offer a stable investment option. Let’s understand what Balanced Advantage Funds are and explore the 5 Best Balanced Advantage Mutual Funds to invest in 2024.
Also read: 5 Largecap Mutual Funds with Highest Returns in last 5 years
What are Balanced Advantage Funds?
Balanced Advantage funds, also called dynamic asset allocation mutual funds, invest in both equity and fixed-income options. The beauty of these funds is that they aim to provide investors with a balanced exposure to both asset classes while adapting to changing market dynamics.
How does balanced advantage funds work?
Here’s a sample example to illustrate how Balanced Advantage Funds work:
Let’s assume you invest in a Balanced Advantage Fund with an initial allocation of 70% in equities and 30% in debt instruments. The fund manager constantly monitors market conditions and adjusts the allocation to optimize returns and manage risk.
Scenario 1: Bullish Market
During a bullish market phase, when the equity market is performing well, the fund manager may decide to increase the equity allocation to capitalize on potential capital appreciation. In this case, the fund’s allocation might shift to 80% in equities and 20% in debt.
Scenario 2: Bearish Market
Conversely, in a bearish market where equity markets are underperforming, the fund manager might reduce the equity exposure to limit potential losses. The allocation could then be adjusted to 60% in equities and 40% in debt, aiming to provide downside protection.
Scenario 3: Volatile or Uncertain Market
In a volatile or uncertain market, the fund manager may maintain a balanced allocation or adjust it cautiously based on the prevailing conditions. For example, the allocation might be maintained at 70% in equities and 30% in debt to navigate market fluctuations.
How we selected these Best Balanced Advantage Mutual Funds to invest in 2024?
We have used the following criteria to filter these balanced advantage funds.
- Funds that generated highest returns in last 3 years, 5 years and 10 years perspective. Funds that have > 10 years performance, only 3 to 5 years performance is considered.
- Considered funds that generated high rolling returns for 3 years and 5 years perspective.
Importance of Balanced Advantage Funds
Here are some key points highlighting the importance of Balanced Advantage Funds:
Dynamic Asset Allocation:
Balanced Advantage Funds use a dynamic approach to asset allocation, allowing fund managers to adjust the portfolio’s exposure to equity and debt based on market conditions. This flexibility enables them to take advantage of opportunities and mitigate risks in different market scenarios.
Risk Management:
The dynamic nature of asset allocation helps in managing risk effectively. During periods of market volatility, the fund manager can reduce exposure to equities to protect the portfolio from significant downside risk. Conversely, in bullish market conditions, the fund can increase equity exposure to capture potential capital appreciation.
Diversification:
These funds inherently offer diversification benefits by investing in a mix of equity and debt instruments. Diversification helps in spreading risk across different asset classes, reducing the impact of poor performance in any single category on the overall portfolio.
Investor Suitability:
Balanced Advantage Funds are suitable for investors with a moderate risk appetite who seek a balanced exposure to both equities and debt. The dynamic nature of asset allocation makes these funds adaptable to changing market conditions, making them suitable for a broad range of investors.
Market Timing:
Fund managers of Balanced Advantage Funds use their expertise to make tactical asset allocation decisions based on their assessment of market conditions. This can potentially provide investors with a more strategic approach to navigating various phases of the market cycle.
Stable Returns:
By actively managing the allocation between equities and debt, these funds aim to provide relatively stable returns over the long term. This can be appealing to investors who want exposure to the potential growth of equities but also desire a level of capital preservation through debt investments.
Tax Efficiency:
The tax treatment of gains in debt and equity instruments differs, and the dynamic asset allocation in these funds can be structured to provide tax efficiency. For example, gains from debt securities may have more favorable tax implications compared to gains from equity investments.
Best Balanced Advantage Mutual Funds to invest in 2024
1) HDFC Balanced Advantage Fund
2) Baroda BNP Paribas Balanced Advantage Fund
3) Edelweiss Balanced Advantage Fund
4) ICICI Prudential Balanced Advantage Fund
5) Kotak Balanced Advantage Fund
Best Balanced Advantage Funds – Investment objective and Performance
Lets get into more info about where does these funds invests and performance metrics
#1 – HDFC Balanced Advantage Fund
Investment objective: Funds objective is to provide long term capital appreciation / income from a dynamic mix of equity and debt investments.
SIP returns of the fund
- 3 Years – 24%
- 5 Years – 22.8%
- 10 Years – 16.8%
Rolling Returns
In terms of 3 year rolling returns, this fund outperformed its peers
- Over 12% returns – 96% of the times
- 0% to 12% returns – 4% of the times
- Negative returns – Zero times
In terms of 5 year rolling returns, this fund outperformed its peers
- Over 12% returns – 100% of the times
- 0% to 12% returns – Zero times
- Negative returns – Zero times
This fund has outperformed its peers in short term, medium term and long term and generated 17% annualized returns in the last 10 years.
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2) Baroda BNP Paribas Balanced Advantage Fund
Investment objective: The scheme seeks to generate capital appreciation by investing in a portfolio of equity or equity linked securities while the secondary objective is to generate income through investments in debt and money market instruments. It also aims to manage risk through active asset allocation
SIP returns of the fund
- 3 Years – 14.2%
- 5 Years – 16.2%
- 10 Years – NA
Rolling Returns
In terms of 3 year rolling returns, this fund outperformed its peers
- Over 12% returns – 100% of the times
- 0% to 12% returns – Zero times
- Negative returns – Zero times
In terms of 5 year rolling returns, this fund outperformed its peers
- Over 12% returns – 100% of the times
- 0% to 12% returns – Zero times
- Negative returns – Zero times
Even this balanced advantage fund has consistently outperformed its peers in short term to medium term and generated 16% annualized returns in the last 5 years.
3) Edelweiss Balanced Advantage Fund
Investment objective: The scheme will invest in arbitrage opportunities, equity derivative strategies, pure equity investments and the balance in debt and money market instruments.
SIP returns of the fund
- 3 Years – 12.4%
- 5 Years – 15%
- 10 Years – 12.8%
Rolling Returns
In terms of 3 year rolling returns, this fund outperformed its peers
- Over 12% returns – 100% of the times
- 0% to 12% returns – Zero times
- Negative returns – Zero times
In terms of 5 year rolling returns, this fund outperformed its peers
- Over 12% returns – 100% of the times
- 0% to 12% returns – Zero times
- Negative returns – Zero times
This fund is consistent performed in terms of annualised returns, SIP returns and rolling returns in short term, medium term and long term and generated 13% annualised returns in the last 10 years.
4) ICICI Prudential Balanced Advantage Fund
Investment objective: The scheme seeks to provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments.
SIP returns of the fund
- 3 Years – 13%
- 5 Years – 14%
- 10 Years – 12.3%
Rolling Returns
In terms of 3 year rolling returns, this fund outperformed its peers
- Over 12% returns – 87% of the times
- 0% to 12% returns – 13% of the times
- Negative returns – Zero times
In terms of 5 year rolling returns, this fund outperformed its peers
- Over 12% returns – 100% of the times
- 0% to 12% returns – Zero times
- Negative returns – Zero times
This mutual fund has been consistently performing well in short term, medium term and long term and generated 13% annualized returns in the last 10 years.
5) Kotak Balanced Advantage Fund
Investment objective: The investment objective of the scheme is to generate capital appreciation by investing in a dynamically balanced portfolio of equity & equity related securities and debt & money market securities.
SIP returns of the fund
- 3 Years – 11.5%
- 5 Years – 12.8%
- 10 Years – NA
Rolling Returns
In terms of 3 year rolling returns, this fund outperformed its peers
- Over 12% returns – 70% of the times
- 0% to 12% returns – 30% of the times
- Negative returns – Zero times
In terms of 5 year rolling returns, this fund outperformed its peers
- Over 12% returns – 100% of the times
- 0% to 12% returns – Zero times
- Negative returns – Zero times
Even this balanced advantage fund is the consistent performer in short term to medium term and generated 12% annualized returns in the last 5 years.
Best Balanced Advantage Mutual Funds for 2024 – Annualized Returns
| Scheme Name | 3 Yrs | 5 Yrs | 10 Yrs |
|---|---|---|---|
| HDFC Balanced Advantage Fund | 27% | 18% | 17% |
| Baroda BNP Paribas Balanced Advantage Fund | 14% | 16% | – |
| Edelweiss Balanced Advantage Fund | 14% | 14% | 13% |
| ICICI Prudential Balanced Advantage Fund | 14% | 13% | 13% |
| Kotak Balanced Advantage Fund | 12% | 12% | – |
Source Data: Moneycontrol and Value Research Online
Also Read: How to create 100 Crores with Mutual Funds?
FAQs on Balanced Advantage Mutual Funds
1) Which are the top 10 balance advantage funds in last 5 years?
Below are the top performing balanced advantage mutual funds in last 5 years.
- HDFC Balanced Advantage Fund
- Baroda BNP Paribas Balanced Advantage Fund
- Edelweiss Balanced Advantage Fund
- ICICI Prudential Balanced Advantage Fund
- Kotak Balanced Advantage Fund
- Nippon India Balanced Advantage Fund
- Aditya Birla Sun Life Balanced Advantage Fund
- Union Balanced Advantage Fund
- Motilal Oswal Balance Advantage Fund
- Invesco India Balanced Advantage Fund
2) Is it good to invest lumpsum in balanced advantage fund?
While investments in such funds can be made through the SIP mode, investors may also choose to invest a lump sum, although it’s advisable to split it into smaller parts.
3) Are Balanced Advantage Fund returns guaranteed?
Balanced Advantage funds do not provide any guaranteed returns. The returns would depend on the underlying assets in which such funds are invested. Typically, these funds generate 10% to 15% annualized returns in the medium to long term, though they are not guaranteed.
4) Best Balanced Advantage Fund Value Research
Below are the 5 star and 4 star rated balanced advantage mutual funds from Value Research.
- HDFC Balanced Advantage Fund
- Edelweiss Balanced Advantage Fund
- ICICI Prudential Balanced Advantage Fund
- Kotak Balanced Advantage Fund
- Sundaram Balanced Advantage Fund
- Tata Balanced Advantage Fund
5) Best Balanced Advantage Fund – moneycontrol
While moneycontrol does not provide separate ranking of mutual funds, it provides additional layer of information with Crisil rank. Below are the Top Crisil rated balanced advantage funds indicated as per moneycontrol portal.
- Invesco India Balanced Advantage Fund – 5 star fund
- HDFC Balanced Advantage Fund – 4 star fund
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