Best Balanced Advantage Fund in India 2024
08 November 2024
9 min read
00:00 / 00:00
If you observe closely, the post-COVID world order has gone hybrid. From hybrid work to hybrid cars and hybrid mutual funds, we prefer the best of both worlds.
Hybrid mutual funds bring to you the growth potential of equity and predictable safer returns from debt. Within hybrid, there’s a category of funds known as balanced advantage funds that invest in equity as well as fixed income securities, and the allocation is balanced as per market conditions. These funds are also known as dynamic asset allocation funds.
In this article we will explore the best balanced advantage funds in the market and how you can benefit from them.
Top 10 Balanced Advantage Funds
Scheme Name | AUM (Rs. Cr) | Return (5Y CAGR) | Expense Ratio |
HDFC Balanced Advantage Fund | 96539 | 20.79% | 0.72% |
Baroda BNP Paribas Balanced Advantage Fund | 4187 | 17.35% | 0.72% |
Edelweiss Balanced Advantage Fund | 12690 | 16.46% | 0.46% |
Tata Balanced Advantage Fund | 10453 | 15% | 0.34% |
Nippon India Balanced Advantage Fund | 8950 | 14.2% | 0.56% |
Aditya Birla SL Balanced Advantage Fund | 7701 | 14.07% | 0.67% |
ICICI Pru Balanced Advantage Fund | 62051 | 13.81% | 0.84% |
AXIS Balanced Advantage Fund | 2577 | 13.79% | 0.82% |
Kotak Balanced Advantage Fund | 17206 | 13.53% | 0.51% |
Invesco India Balanced Advantage Fund | 889 | 13.19% | 0.86% |
Best Performing Balanced Advantage Funds 2024
1. HDFC Balanced Advantage Fund
One of the top 5 balanced advantage funds in the dynamic asset allocation category, HDFC Balanced Advantage Fund has 64% corpus invested in equities that offer long term growth and 30% allocation to debt for stable returns.
This scheme is suitable for investors looking for long term capital appreciation and income from a dynamic mix of equity and debt investments.
HDFC Balanced Advantage Fund | AUM: Rs. 96536 Cr |
Incepted In | 1 Feb 1994 |
CAGR since Inception | 14.68% |
CAGR 5-Year Vs Category Average | 20.79% / 10.95% |
Expense Ratio | 0.72% |
Risk Parameter Vs Category Risk (5Y) | 16.56% / 10.13% |
2. Baroda BNP Paribas Balanced Advantage Fund
BNP Paribas Balanced Advantage Fund has 57% corpus invested in equities, 26% allocation to debt, and 6.35% in ReITs/InvITs. Top stock holdings are Reliance Ind, HDFC Bank, ICICI Bank, L&T etc.
Baroda BNP Paribas Balanced Advantage Fund | AUM: Rs. 4187 Cr |
Incepted On | 14 Nov 2018 |
CAGR since Inception | 8.25% |
CAGR 5-Year Vs Category Average | 17.35% / 10.13% |
Expense Ratio | 0.72% |
Scheme Risk Vs Category Risk | 10.79% / 10.13% |
3. Edelweiss Balanced Advantage Fund
Incepted in 2009, Edelweiss Balanced Advantage Fund holds 66% corpus in equity and 27% in debt. In the equity portfolio, 85% of the holdings are in large caps. The top stock holdings in the fund are HDFC Bank, ICICI Bank, NTPC, Infosys, Reliance Ind, etc.
Edelweiss Balanced Advantage Fund | AUM: Rs. 12690 Cr |
Incepted On | 20 Aug 2009 |
CAGR since Inception | 9.23% |
CAGR 5-Year Vs Category Average | 16.46% / 10.95% |
Expense Ratio | 0.46% |
Scheme Risk Vs Category Risk | 10.02% / 10.13% |
4. Tata Balanced Advantage Fund
Tata Balanced Advantage fund has 67% of its corpus invested in equity, 25% in debt, and 2% in ReITs. 93% of the equity holdings are in large cap stocks. The top stock holdings are HDFC Bank, Reliance, Bharti Airtel, ICICI Bank, SBI etc.
Tata Balanced Advantage Fund | AUM: Rs. 10453 Cr |
Incepted On | 28 Jan 2019 |
CAGR since Inception | 6.92% |
CAGR 5-Year Vs Category Average | 15% / 10.95% |
Expense Ratio | 0.34% |
Scheme Risk Vs Category Risk | 9.43% / 10.13% |
5. Nippon India Balanced Advantage Fund
The fund holds 68% corpus in equity, 20% in debt, and 2% in ReITs. In the equity portfolio, 14% is in mid and small caps and 84% is in large cap stocks. ICICI Bank, HDFC Bank, Infosys, Bharti Airtel, and NTPC are top equity holdings.
Nippon India Balanced Advantage Fund | AUM: Rs. 8950 Cr |
Incepted On | 1 Feb 1994 |
CAGR since Inception | 11.42% |
CAGR 5-Year Vs Category Average | 14.2% / 10.95% |
Expense Ratio | 0.56% |
Scheme Risk Vs Category Risk | 10.66% / 10.13% |
6. Aditya Birla SL Balanced Advantage Fund
The fund holds 53% corpus in equity, 20% in debt, and 3% in ReITs. With 85% equity holdings in large caps, the fund's top stock holdings are HDFC Bank, Reliance, Infosys, ICICI Bank, ITC, etc.
Aditya Birla SL Balanced Advantage Fund | AUM: Rs. 7701 Cr |
Incepted On | 25 Apr 2000 |
CAGR since Inception | 11.78% |
CAGR 5-Year Vs Category Average | 14.07% / 10.95% |
Expense Ratio | 0.67% |
Scheme Risk Vs Category Risk | 11.76% / 10.13% |
7. ICICI Pru Balanced Advantage Fund
The fund holds 46% corpus in equity, 20% in debt, and 3% in ReITs. 93% of equity corpus is invested in large caps and top stock holdings are TVS Motors, ICICI Bank, Maruti Suzuki, HDFC Bank, Infosys, etc.
ICICI Pru Balanced Advantage Fund | AUM: Rs. 62051 Cr |
Incepted On | 31 Dec 2006 |
CAGR since Inception | 12.10% |
CAGR 5-Year Vs Category Average | 13.81% / 10.95% |
Expense Ratio | 0.84% |
Scheme Risk Vs Category Risk | 11.11% / 10.13% |
8. AXIS Balanced Advantage Fund
AXIS Balanced Advantage Fund holds 58% of the corpus in equity and 29% in debt. Top stock holdings are HDFC Bank, Reliance Ind, Infosys, ICICI Bank etc.
AXIS Balanced Advantage Fund | AUM: Rs. 2577 Cr |
Incepted On | 1 Aug 2017 |
CAGR since Inception | 6.57% |
CAGR 5-Year Vs Category Average | 13.79% / 10.95% |
Expense Ratio | 0.82% |
Scheme Risk Vs Category Risk | 8.62% / 10.13% |
9. Kotak Balanced Advantage Fund
The fund holds 51% corpus in equity and 23% in debt. Top stock holdings are HDFC Bank, Infosys, ICICI Bank, Reliance Ind, Interglobe Aviation, etc.
Kotak Balanced Advantage Fund | AUM: Rs. 17206 Cr |
Incepted On | 3 Aug 2018 |
CAGR since Inception | 6.38% |
CAGR 5-Year Vs Category Average | 13.53% / 10.95% |
Expense Ratio | 0.51% |
Scheme Risk Vs Category Risk | 10.74% / 10.13% |
10. Invesco India Balanced Advantage Fund
The fund holds 48% corpus in equity and 20% in debt. Top stock holdings are L&T, TCS, HDFC Bank, ICICI Bank, Reliance Ind, etc.
Invesco India Balanced Advantage Fund | AUM: Rs. 889 Cr |
Incepted On | 4 Oct 2007 |
CAGR since Inception | 11.37% |
CAGR 5-Year Vs Category Average | 13.19% / 10.95% |
Expense Ratio | 0.86% |
Scheme Risk Vs Category Risk | 11.51% / 10.13% |
How Do Balanced Advantage Funds Work
As the name suggests, a balanced advantage fund works to ‘balance’ the allocation of equity and debt in the fund as per market conditions to aim for the best return for investors with a changing market dynamic.
Fund managers evaluate market performance, individual stocks, and overall valuations to switch between equity and fixed income assets. When markets are peaking and valuations are high, funds are allocated in fixed income and when markets cool off and stocks are at attractive valuations, corpus tilts towards equity. There are quantitative models employed to manage the dynamic allocation between assets. The quantitative dynamic model ensures there is no individual judgment involved in asset allocation to minimise subjective decision making and human error.
Balanced Advantage Fund Taxation
Balanced advantage Funds are taxed according to the equity component held in the fund corpus. These funds do not have any restriction on allocation to any specific asset class, they can allocate any amount from zero to 100% in equity. Different AMCs may hold different weightage in equity. Investors need to ascertain the average equity holding of the fund in last 12 months for guidance on tax calculation.
It is generally a industry practice to maintain equity levels above 65% to enjoy equity taxation. But depending on market conditions, managers may reduce equity holding, may even reduce it to 35% or even lower. Depending on the average equity holding of the last 12 months from the redemption date, the following taxation rule will be applicable.
Hybrid funds which usually invest 65% or more in equity & equity-related instruments are treated like equity funds for taxation and those with allocation up to 35% in equity & equity-related instruments will be taxed as per the new taxation structure of debt funds announced in Union Budget 2024.
Funds with equity >65%
Short-term Capital Gain Tax - STCG: Gains are taxed at a rate of 20% if units are redeemed within 1 year of investment.
Long-term Capital Gain Tax - LTCG) For units redeemed after 1 year of investment, gains of up to Rs. 1.25 lakh from sale of these units in a financial year shall be exempted from tax.
Gains of more than Rs. 1.25 lakh will be taxed at 12.5%.
Fund with an equity allocation of 35-65%
STCG: If mutual fund units are redeemed within 2 years of purchase, the entire capital gain will be added to the investor's income and taxed as per the applicable slab rate.
LTCG: For units redeemed after 2 years of investment, capital gains will be taxed at a rate of 12.5%.
Fund with debt >65%, equity <35%
The entire amount of capital gain will be added to the investor's income (irrespective of the period of investment) and taxed as per the applicable slab rate.
Who Should Invest in Top Balanced Advantage Fund
Balanced advantage funds offer their investors potential benefits, let’s take a look:
Balanced advantage funds do not have any restriction on asset allocation, they can modify equity allocation from nil to 100%. This allows the portfolio sufficient flexibility to adjust to market conditions and deliver potentially better returns compared to regular hybrid funds.
Balanced advantage funds aim to ride market volatility by adjusting equity allocation as per predefined models when markets swing from bear to bullish mode. Thus, these funds take advantage of market ups and downs and are relatively less volatile compared to pure equity funds.
Investors can enjoy tax benefits of equity funds over the long term in funds that hold more than 65% equity exposure. Hence the equity component promises long term growth tax benefits, and also a fixed income exposure for income generation.
Balanced advantage funds handle risk better than pure equity funds as the allocation shifts to debt when markets are overvalued and equity allocation goes up when markets are at lower levels. Since a quantum is invested in debt, these funds have a lower risk compared to pure equity funds.
Investors can invest in balanced advantage funds in any market situation as the portfolio adjusts automatically guided by market dynamics. When markets are bullish, the allocation is adjusted towards fixed income and vice versa.
Conclusion
Balanced Advantage funds offer the benefits of equity as well as fixed income to investors. This category of mutual funds is suitable for investors looking for the magic of equity investing and long-term growth as well as the stability of fixed income instruments. Also, investors stand to benefit from a preferred tax structure for equity funds in certain balanced advantage funds which on an average hold more than 65% corpus in equity. Investors can allocate a part of their portfolio to this category for moderate risk assets after assessing their risk appetite and long term goals.
FAQs
Q. What is Balanced Advantage Fund?
A balanced advantage fund, also known as dynamic asset allocation fund is a hybrid fund that invests in equity and fixed income assets and this allocation is balanced as per market conditions.
Q. Is it good to invest lumpsum in balanced advantage fund?
Yes, you can invest lumpsum in balanced advantage funds for long term growth as well as fixed returns. These funds are suitable for moderate risk appetite since a part of the corpus is invested in equity.
Q. Is the balanced advantage fund safe?
Investors must assess their risk appetite and investment goals before selecting any investment. Balanced Advantage Funds are safer compared to pure equity funds due to fixed income allocation and adjustment as per market conditions.
Q. Which is the best balanced advantage fund?
You can consider the following top-performing balanced advantage funds:
HDFC Balanced Advantage Fund
Baroda BNP Paribas Balanced Advantage Fund
Edelweiss Balanced Advantage Fund
Tata Balanced Advantage Fund
Nippon India Balanced Advantage Fund
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