• • As per SEBI’s classification of mutual funds, a BAF is a type of a hybrid mutual fund.




• • It balances between debt and equity investments, through a dynamic investing strategy that is driven by market conditions. It is also called ‘Dynamic Asset Allocation Fund’.




• • Under this, fund managers are free to invest anywhere from 0 to 100% in both debt and equity.




• • We buy during discounts those same products which seem overly priced otherwise. BAF work on the same model. It looks to invest in under-valued assets, while selling off over-valued assets. Simply put, it adjusts the allocation between debt and equity as per their changing values, to give you a truly balanced ‘winning combination.




• • Its core objective is to provide the long-term capital appreciation of equity along with potential for steady income through debt.

BAFs can provide investors with several benefits, these include:

• - Gives you an ‘all-weather’ portfolio

  
  

  When stock prices are high, BAFs reduce their equity holding. Similarly, when stock prices fall, BAFs increase the equity part. This dynamic investing strategy aims for balanced returns through all market conditions.




• - Diversification

  
  

  A mix of equity (across sectors and market caps) and debt instruments ensures diversification.




• - Potential to give you the upside of Equity, balanced with Debt

  
  

  With the flexibility to invest a significant part in equity, BAFs provide the long-term growth potential of equity. Furthermore, they invest in debt instruments to balance out the overall portfolio risk.

Balanced Advantage Funds are best suited for:

• - Investors looking for a more aggressive investment option than debt funds, but more conservative than pure equity funds

• - Investors looking for long term capital growth potential of equity but at better managed risk levels

• - Investors looking to diversify their portfolio through fund manager expertise