Balanced advantage mutual funds: 5 smart things to know

1.Balanced advantage funds are hybrid mutual funds that use a dynamic asset allocation strategy to switch between debt and equity without any constraints.

2.They have the potential to maximise returns by increasing equity exposure in a bull market.

3.They also aim to manage risk by reducing equity exposure during volatile markets which can help protect capital.


4.Through a market cycle, BAF returns can help beat inflation in the long term by reducing the downside of equity markets.

5.These can be taxed as debt or equity funds based on asset allocation. Most manage equity taxation by using equity derivatives and hedging strategies.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.