One of the most famous hybrid mutual funds in India is named HDFC Balanced Advantage Fund. This is an open-ended balanced investment scheme that buys in equity as well as debt securities. A prudent combination of equity and debt seeks to achieve long-term capital growth for the fund. Let’s take a look at 5 key benefits of investing in hdfc balanced advantage fund:
One of the merits of balanced funds with examples being HDFC Balanced Advantage Fund is diversification. It is invested mainly in both stocks and bonds/ debts. The implication of this is that it also helps cut on risks due to equity and debt markets are not equal movers. It usually happens that when a particular asset class underperforms, another asset class balances it. Its asset allocation will determine the amount of equity and debt, which will be chosen dynamically by the market conditions. It offers good diversification across both asset class and instrument level.
2. Attractive Returns
HDFC Balanced Advantage Fund, in the long term, has yielded appealing returns. It has produced an average return that is more than 12% during the last ten years. Its returns have outperformed several pure equity funds across a similar time scale. This fund targets equity-like returns, albeit at a lower volatility rate when compared to the so-called pure equity funds. This approach towards dynamic asset allocation enables it to seek value upsides in both equity and debt market.
3. Reduced Risk
The reduction on total portfolio risk is caused by the investment in a mixture of asset classes, since it is not just in equity only. Debt markets tend to be less volatile compare to equity ones. Debt allocation by the fund offers protection for fluctuations of equity market. It also has a dynamic strategy that increases debt allocation during periods where equity markets are highly volatile, a move which further helps in managing risk. The balanced approach is thus more stable way to make long term wealth.
First, it provides a high level of flexibility in the choice of equities and fixed assets. Its management is dynamic by virtue of its portfolio managers being able to make on-the-fly allocation changes as necessitated by prevailing market conditions. In times of high equity market evaluation and price fluctuation, the debt ratio could be increased up to one hundred percent. In contrast, allocating may increase to 65%, the amount of capital when equity market seems good. Such flexibility maximizes the overall adjustment for risk in time value of money.
5. Experienced Management
It has a competent group of specialists that are highly skilled in controlling mutual funds. They have in-depth understanding and experience on investments in several cycles. The fund managers have shown their competence in picking up the best investment opportunities in both equities and debts over years. HDFC Balanced Advantage Fund has always outmatched its benchmark index by achieving significantly higher returns and consistently defeating others in the same category. This indicates that the fund managers employ appropriate investment strategy and philosophy. That is, their dynamic asset allocation strategy allows them to manage changing market situations successfully.
For 5paisa investors interested in equities and at similar time, seek to minimize some market side effects, hdfc flexi cap fund is recommended. It is a hybrid fund with unique characteristics that position among the best hybrid fund for long term wealth creation goals; the attributes include balance approach, diversification benefits, flexibility and experienced management.