What is a balanced advantage fund and why should you invest in it

A balanced advantage fund, commonly known as a dynamic asset allocation fund, is a type of mutual fund that combines the features of both equity and debt funds. These funds aim to provide investors with a balanced approach to investing by maintaining a mix of stocks and bonds in their portfolio.

Bajaj Finserv Balanced Advantage Fund

The primary goal of a balanced advantage fund is to offer the potential for capital appreciation through equity investments while also providing relative stability through debt instruments. This dual strategy helps manage the overall risk of the fund and provides a more moderate level of volatility compared to investing solely in equities.

Heres why you might consider adding this type of fund to your investment portfolio:

Capital appreciation potential and risk diversification

By having exposure to equities, these funds aim to capture the growth potential of the stock market. This can lead to relatively better return potential compared to traditional debt-oriented funds over the long term. Moreover, balanced advantage funds spread the investment across different asset classes, reducing the impact of under-performance in any single category. This diversification helps mitigate risk and provides a smoother investment experience.

Stability through debt allocation and adaptability to market conditions

The allocation to debt instruments, such as government securities and corporate bonds, adds a layer of relative stability to the portfolio. This can be particularly reassuring during market downturns, as debt securities are generally considered less volatile than stocks. Moreover, balanced advantage funds have the flexibility to adjust their equity and debt allocations based on prevailing market conditions. Fund managers can increase equity exposure during bullish phases and shift towards debt in more challenging market conditions, aiming to optimize returns.

Professional management and tax efficiency

Fund managers with expertise in both equity and debt markets actively manage balanced advantage funds. Their role is crucial in decision-making, asset allocation, and adjusting the portfolio according to market dynamics.

Also, gains from equity investments held for more than one year are eligible for long-term capital gains tax, which is currently at a favourable rate. This tax advantage adds another layer of attractiveness to balanced advantage funds.

Its important to note that while balanced advantage funds offer a balanced approach, they are not risk-free. Market conditions, economic factors, and interest rate fluctuations can impact the performance of these funds. Therefore, its essential for investors to carefully assess their risk tolerance, investment goals, and time horizon before considering any investment.

Should you consider an SIP with balanced advantage fund

Investors often aim to devise an investment strategy that offer financial growth along with relative stability. Among the various option available, pairing a Systematic Investment Plan (SIP) with a balanced advantage fund can provide a unique approach to long-term wealth creation.

SIP introduces a disciplined approach to investing. Instead of relying on market timing or lumpsum investments, SIP encourages regular contributions, mitigating the impact of market volatility. This consistent investment habit can be particularly beneficial for individuals looking to build wealth over the long term.

You can consider starting your SIP in Bajaj Finserv Balanced Advantage Fund. Bajaj Finserv AMC recently introduced the Bajaj Finserv Balanced Advantage Fund, enriched with behavioral edge. The minimum application amount in SIP for this scheme ranges from Rs. 500 up to Rs. 1,000 (minimum 60 instalments), and above Rs. 1,000 (minimum 6 instalments). You can visit the investor portal of Bajaj Finserv AMC to invest in this, or you can also seek the help of any authorized distributors for the same. As with any investment decision, it is advisable to consult with financial professionals to ensure alignment with individual financial goals and risk tolerance.

In conclusion, a balanced advantage fund can be a valuable addition to your investment portfolio, offering a well-rounded mix of growth potential and stability. By maintaining a simple and easy-to-understand strategy, these funds provide investors with a convenient way to navigate the complexities of the financial markets while pursuing their investment objectives.

About Bajaj Finserv Asset Management Ltd.

Bajaj Finserv Asset Management Limited, a wholly-owned subsidiary of Bajaj Finserv Limited, has announced its presence in the investment solutions industry. Backed by one of India’s most respected and oldest brands, it offers a host of innovative products and solutions to every Indian. With a future-focused and differentiated investment strategy, its ambition is to help every Indian achieve his/her financial goals.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.