Balanced Advantage Funds invest in a mix of debt and equity. However, allocation is dynamic and not static. While a traditional balanced fund will have a pre-determined ratio of 70:30 in favor of equities, a balanced advantage fund has an edge, in the sense that the fund manager can allocate up to 70-80% in equity or debt. , depends on the market scenario. Usually, when Nifty or Sensex fall sharply, such funds will increase allocation to equities and if rates are too high, they increase allocation to long-term debt, thus performing well in both the market conditions. We do. Hence, it is because of this dynamic asset allocation feature that these are known as ‘all-season funds’.

Here the downside risk is reduced as compared to the situation when one invests 100% of the money in equities. Investors do not have to worry about the timing of the market. The asset allocation formula allows for automatic reallocation so that funds are invested when markets are rising and cash when markets are falling. it means estate The Balanced Advantage created by the Bull Market Rally is protected by the fund as the allocation across asset classes is rule-based and ensures timely monetization.

The dynamic nature of Balanced Profit Fund is extremely useful for long term wealth creation. It ticks all the right boxes in terms of asset allocation, tax benefits over fixed deposits and removing the need to find a suitable timing to enter the market as the fund is designed to find the right opportunities for investors like Sanjay. has gone. in any market cycle.

(Content on this page is courtesy of Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Aarti Bhargava and Labh Mehta.)