Balance your ADVANTAGE

Posted By: Admin

Off late the equity markets have run up quite a bit thanks to the easy liquidity policy of global banks.  The Excess liquidity has also meant that interest rates are at an all time low. Esp for risk averse investors who want to get a higher return than what they have in the banks, they need to  look elsewhere, but the stock markets could be very volatile and returns therein can be uncertain. So not the best place for investors seeking good returns based on low risk.  So what's the Answer ? 

 Balanced Advantage Fund?

Recent SEBI norms dated April 2018 created new categories, one among them is called Balance Advantage Fund or Dynamic Asset Allocation. As per norms they should have investments in equity/debt that is managed dynamically.

This Fund will dynamically alter the asset allocation between equity and debt. They will be changing the allocation as per the market condition to provide a good return with lesser risk. This category came into existence post recategorization. 

This Fund follows a strategy of buying in low and selling in High. Hence, they would be suitable for the long term. As it changes its category from equity to debt as per the market conditions, they are considered to be less risky compared to equity funds.

Equity – Provide market – linked returns 

Equity allocation would be between 30% to 80% as per the market condition and price- earnings ratio.

Debt – Provide fixed returns 

In debt they used to take duration and credit calls, which also contributes to fund performance. 

Taxation – Same as pure equity

These funds are taxed just like pure equity. If they hold the investment for more than one year the capital gain are treated as long term capital gain (LTCG). Within one year its (STCG)

Who can go for this Fund?

  1. Those who wanted to have returns more than debt as well as with less risk than equity.
  2. Diversification – Those who are looking for diversification between equity and debt as per market.
  3. Those who do not want to rebalance their funds often. It also reduces the volatility.
  4. As this fund is dynamic in nature it helps you to take advantage of positive movements of the equity market and protects you from negative markets. 


First time investors who do not want to take risk in investing in direct equity can go with a Balanced advantage fund which provides your risk adjusted return. Balanced advantage funds are preferred for their steady and recurring returns. 


Safe Harbour : investments in Mutual Funds are subject to Market risks, investors are requested to read the offer document carefully before committing investment. Neither the principal nor the returns are guaranteed and investors must assure themselves of the fitment to their needs before committing their investments.  

By Bhuvaneswari

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