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While the benchmark is still trading at a low level since this year, many Balance Advantage Funds have given more than that. This category also gives good benefits in the long run.
- The exposure of Baif in Equity was 46% in December 2019, which increased to 74% in March 2020.
- Exposure to equities declined to 62% when the market started recovering from March.
This Diwali, if you want a better return, leaving behind the ups and downs in the market, then you should take the path of Balance Advantage Fund (BAF). Actually there is a category of Baf mutual fund which invests your investment in equity and debt.
Retail investors often buy at higher prices
It is often seen that retail investors invest in the stock market when the market is high. That is, investors buy at an expensive valuation. The effect of this is that they buy at an expensive price but sell at a cheaper price. This causes them losses. Baif works right here. Baf buys cheap and sells expensive. When the market is up, it puts your investment in debt. When the market is down, he buys in equity.
Two companies have 70 of the total AUM of the industry.% Part
The country’s two largest mutual fund companies ICICI Prudential (ICICI Pru) and HDFC account for 70% of the total Asset Under Management (AUM) of the Baf category in the mutual fund industry. However, ICICI Pru is on top in terms of performance till 31 October. It has given a return of 7.93 in 5 years and 10.53% in 10 years. While HDFC has given returns of 5.15 and 7.99% in the same period. Since March 2010, ICICI Pru has given a return of 11.2% while its benchmark Nifty-50 has given a return of 9.3%.
Investment of 10 thousand months became 20.28 lakhs in 10 years
If an investor had done a monthly SIP of Rs 10,000 in ICICI Pru, then this investment has become 20.28 lakh rupees today. ICICI Pru’s AUM is 26,439 crores. Its investment in equity varies from 30 to 80% depending on the market valuation. Nimesh Shah, MD, ICICI Pru AMC, says that whenever there are opportunities in the market, there is a risk. The market fluctuates from all the global factories. Therefore, we believe that at such a time, the Balance Advantage Fund gives you an offer.
The core portfolio should be beefed up
Nimesh Shah says that this product should be in the core portfolio of every investor. Because it meets the needs of investors in all risk profiles. There is a wide variation of asset allocation in this category. It is followed by all fund houses. Some fund houses follow the Price to Earnings (P / E) ratio while some follow the P / E and Price to Book (PB). ICICI follows the PB model. This leads to higher performance of the scheme.
There are advantages in fluctuations
Another advantage of this type of mutual fund scheme is that they are able to deal with it whenever the market is in volatility. For example, when the market fell sharply in March 2020, the scheme worked well. However, investors did not invest money at that time out of fear. But the Balance Advantage Fund increased its exposure to equity. The exposure of this scheme to equity in December 2019 was 46%, which increased to 74% in March 2020. Then when the market started recovering from there, the exposure in equity decreased to 62%.
Return of returns higher than the benchmark in this year
While the benchmark is still trading at a low level since this year, many Balance Advantage Funds have given more than that. This category also gives good benefits in the long run. Investors can invest in it through SIPs for long-term goals such as marriage, education or retirement. Some fund houses have recently launched this scheme. While ICICI Prudential is a pioneer in this category.