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My opinion
Aggressive long-term investors who wish to invest in stocks for higher returns while limiting their losses in a market downturn can invest in balanced benefit funds to build long-term wealth by reducing their risk in n ‘not investing in pure equity funds. Within the hybrid mutual fund category, Advantage Balanced Funds, also known as dynamic asset allocation funds, have a mix of equity and debt asset classes and, depending on the fluctuations in the market, these funds adjust their asset allocation, resulting in a well-diversified portfolio that you can build. risk-adjusted returns in the event of a market downturn or volatile market.
Investing in these funds can generate long-term growth and may outperform inflation due to the existence of stocks, as well as reducing the absolute risk of market volatility due to the presence of debt stocks, which can act as a cushion against stocks. Therefore, when it comes to controlling turbulence in various market circumstances, investing in balanced advantage funds is a good choice to limit your risk in a chaotic market.
Since these funds are dynamic in nature, fund managers manage volatility by buying stocks at low premium and selling them at higher valuations. Without having pure equity or debt funds, this strategy improves the stability of your portfolio. These funds use the Price to Book (P / B) method to analyze undervalued stocks that could potentially increase in terms of market value.
The value of net assets in a company’s books or balance sheet is called the book value. We can calculate the book value of a business by subtracting its liabilities from its physical assets. When it comes to choosing undervalued stocks, the P / N ratio is more useful than the P / E ratio. And in determining the distribution of market values ​​among shareholders after a company has cleared its liabilities, the P / E ratio and book value play an important role.
When discussing the P / B ratio, it is important to note that since balanced advantage funds use the P / B ratio approach, these funds choose stocks with high growth potential. According to CIFAR data in Q3 2021, Balanced Advantage funds returned 10.14% in the previous six months, 26.1% in the previous year, 11.37% in the past three years, 9.74% over the past five years and 12.15 percent over the past 10 years. These returns shouldn’t be your only consideration to invest in, however, you can diversify your portfolio with the 5-star rated balanced advantage funds we’ve selected below and enjoy your journey of wealth without fear of the stock market crash.
However, I would advise our readers not to rely solely on highly rated funds; instead, they should compare the performance of the fund with that of the benchmark and take into account the expense ratio, portfolio turnover ratio, holdings, level of risk, exit charge and d other factors in order to invest wisely in mutual funds.
Baroda Dynamic Equity Fund Direct – Growth
As of September 30, 2021, this dynamic asset allocation mutual fund system has Rs. 1,580 crore in assets under management (AUM) and a net asset value (NAV) of Rs 16.97 as of 24 December 2021. Value Research gave the fund a 5-star rating and it has an expense ratio of 0.8 percent, which is higher than other funds in the same category. The fund currently has an equity allocation of 43.30%, 28.5% cash and 28.2% exposure to debt.
Baroda Dynamic Equity Fund Direct-Growth has returned 17.85% in the past year and has returned on average 18.52% every year since its inception, according to Groww. The fund has its allocation to stocks in the financials, technology, energy, metals and health sectors. GOI, Infosys Ltd., ICICI Bank Ltd., Reliance Industries Ltd. and HDFC Bank Ltd. are the top five holdings of the fund. The SIP in this fund can be started with a minimum amount of Rs. 500.
Edelweiss Balanced Advantage Fund Direct-Growth
Value Research has also given this fund a 5 star rating, and SIPs can be launched with as little as Rs 500. As of September 30, 2021, Edelweiss Balanced Advantage Fund Direct-Growth has Rs. 6,586.29 crore in assets. under management (AUM) and a net asset value (NAV) of Rs. 38.61 crore as of 24.12.2021. The fund has an expense ratio of 0.46%, which is lower than most other dynamic asset allocation funds. The fund currently has an equity allocation of 59.9%, a debt allocation of 20.90% and an allocation of 19.2% to cash derivatives.
The Edelweiss Balanced Advantage Fund’s direct growth returns over the previous year were 20.36%, according to Groww. It has averaged 13.25% each year since its inception. The financials, tech, energy, consumer goods and automotive sectors are all represented in the fund’s equity allocation. GOI, Reliance Industries Ltd., ICICI Bank Ltd., Infosys Ltd. and HDFC Bank Ltd. are the top five holdings of the fund.
Kotak Balanced Advantage Fund Direct – Growth
This dynamic asset allocation mutual fund program has Rs. 12,256.08 crore in assets under management (AUM) as of 09/30/2021 and has a net asset value (NAV) of Rs. 14.8930 as of December 24, 2021. The fund has an expense ratio of 0.45%, which is lower than most other funds in the same balanced benefit category. The fund currently has an equity allocation of 78.25% and a debt exposure of 21.75%.
As of December 26, 2021, this fund generated 14.48% the previous year and has given an average annual return of 12.45% since inception. Kotak Balanced Advantage Fund Direct-Growth has been rated 5 stars by Value Research and has an equity allocation in the financials, services, metals, technology and energy sectors. The top 5 holdings of the fund are Kotak Liquid Plan A – Growth, GOI, ICICI Bank Ltd., Reliance Industries Ltd., Adani Ports and Special Economic Zone Ltd. One can start SIP in this fund with a minimum monthly contribution of Rs. 1000.
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