Balanced Advantage Funds : Meaning
Balanced Advantage Funds are such mutual funds which alter their asset allocation based on market conditions. That is why they are also known as Dynamic Asset Allocation Funds. These are suitable for investors who prefer less volatility and want to be on safe side. Because there is no restriction on asset allocation.
Advantages of Balanced Advantage Funds
- The fund manager may increase the investments in equities when market are going up and predict the valuations to rise. But they may sell off the stocks to switch to debt instruments when they expect a market crash and save you from heavy losses.
- They offer a good mix of returns that can beat inflation in the long term by reducing the downside of equity markets and provide security of better returns.
- They offer a diversified portfolio as they are multi-dimensional with investment in equity, debt and arbitrage funds.
- They can be taxed as per the the allocation but mostly the equity exposure is more so they are taxed as equity mutual funds.
How to select the right Balanced Advantage Fund
While selecting the best fund, one should not focus solely on historic returns. Because the main purpose of these funds is to protect from volatility. So, one should choose such a fund which has performed good during a down market.
If you want to know the best balanced advantage funds to invest in, feel free to reach us for any investment consultancy, at 9460825477