Balanced Advantage Fund is new way of mutual fund. Currently many investors are aware of investing in mutual funds and many people invest in mutual funds. The rapid rise in the stock market over the last one to one and a half years has seen a huge return on investment for all investors. But after talking to many investors, one fear came to mind and that is, what if the stock market falls after this high? So many people feel the need to book a profit before the market falls.
Concept of Balanced Advantage Fund
Many have probably heard of the Balanced Advantage Fund scheme. It gives you the right mix of equity and debt in a single fund. That is, when the valuation of equity is high, according to the fund manager’s study, it reduces the ratio in equity and increases the ratio in debt. When the valuation of equity is low, the ratio in equity will increase and the ratio in debt will decrease. So those who see a huge return on their investment in an equity fund should not hesitate to shift some of that amount to a Balanced Advantage Fund.
This means that even if there is a corrective rally in the stock market for some reason, you can still secure some of your current profits. Some companies already have such Balanced Advantage Funds in the market. NJ Mutual Fund has recently launched its first Balanced Advantage Fund through New Fund Offer (NFO).
Features of Balanced Advantage Fund
- It is the first rule based asset allocation fund in India. This means that a fund manager here will not determine the ratio between equity and debt. It will automatically determine the ratio between equity and debt in the fund by looking at certain factors, such as equity valuation, interest rate, and global stock market reviews. All this is going to be done through computerized system.
- The method of selecting the shares in the equity share of this fund is 8 different. The stock will be selected after checking the quality, momentum and volatility of the stock.
- Since there is no human intervention in this fund, the rebalancing between equity and debt is going to be better.
Given all of the above features and the current high level of the stock market, it may be advisable to shift some of the huge profits from investing in your mutual fund to such a fund as an asset allocation.
Top 5 Balanced Advantage Fund
| Fund Name | Crisil Rating | 2021 | 2020 | 2019 |
|---|---|---|---|---|
| Invesco India Dynamic Equity Fund | 5★ | 13.75% | 9.21% | 10.53% |
| ITI Balanced Advantage Fund | – | 24.03% | -7.83% | – |
| Aditya Birla Sun Life Balanced Advantage Fund | – | 14.25% | 16.45% | 9.03% |
| NJ Balanced Advantage Fund | – | -0.50% | – | – |
| ICICI Prudential Balanced Advantage Fund | – | 15.31% | 11.97% |
Conclusion
Considering the current interest rates on term deposits (FDs) in banks, it may be beneficial to invest in such a mutual fund scheme separately. By making a lump sum investment in such a fund and adding a Systematic Withdrawal Plan (SWP) to it, a good monthly income can be facilitated. Of course, it is advisable to decide on the amount of investment after consulting with experts in the field.
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