Balanced advantage funds for goal-based investing

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Equity mutual fund investments are known for their potential for reasonable returns, especially during a bullish market period. At the same time, during market downturns, debt funds may be more suitable in a portfolio. But finding this balance in a portfolio might be a demanding task for an everyday investor, especially when they have set financial objectives. This is where balanced advanced funds come in.

Read on to more about how to invest in balanced advantage fund for goal-based investment.

  • Table of contents
  1. Understanding balanced advantage funds
  2. Benefits of investing in balanced advantage fund for goal based investing
  3. Evaluating risk and return in balanced advantage funds
  4. Implementing balanced advantage funds in your investment portfolio
  5. FAQ

Understanding balanced advantage funds

Balanced advantage funds aim to provide investors with potential gains as well as income generation over long term. These types of mutual funds dynamically allocate their portfolio between stocks and bonds based on the prevailing market conditions. When the market is rising and stock returns are high, they may have a higher allocation to equities compared to fixed income. However, during periods of volatility and downturns, they may reduce equity exposure and increase bonds proportionately with an aim to minimize downside risk.

Benefits of investing in balanced advantage fund for goal based investing

Balanced advantage funds’ flexibility to dynamically change asset allocation based on market conditions helps investors stay on track to meet different financial goals while mitigating risks.

Mid to long term goals: These funds provide a balance of growth potential from equities and seek to downside risk by investing in debt, making them well-suited for goals 3-5 years away as well as longer-term targets like retirement.

Potentially higher returns: By adjusting exposure to stocks and bonds, balanced advantage funds aim to offer potentially higher returns than pure debt funds with relatively lower volatility compared to pure equity schemes.

Diversification: A global or sector-agnostic approach provides diversification against company or industry-specific risks.

Professional management: Expert fund management frees up investors to focus on other goals and life priorities.

SIP feature: Regular SIP investment in such funds facilitates rupee cost averaging and locking into prices. Thus, goals can be achieved through planned withdrawals in line with timelines without having to liquidate entire investment during market downturns.

Evaluating risk and return in balanced advantage funds

When evaluating balanced advantage funds, it is important to scrutinise their risk and return profile over different time periods. While these funds aim to take less risk than pure equity funds, their volatility will typically be higher than fixed income funds or conservative hybrid funds.

Investors need to understand a fund's standard deviation and maximum drawdown numbers to gauge the total risk undertaken to generate its returns. Studying performance during past market downturns provides valuable insights.

For example, some funds may have fluctuated more than expected. Hence, comparing performance metrics like alpha, beta, and Sharpe ratio with the category average over different timeframes can help assess whether the fund has successfully delivered returns commensurate with the risk levels.

Implementing balanced advantage funds in your investment portfolio

When implementing balanced advantage funds in your investment portfolio, careful planning and assessment is required. These funds are most suitable for the core part of your portfolio aimed at steady growth. An ideal way to use them is to complement balanced advantage funds with other asset classes according to your risk profile and financial objectives.

For example, you can pair it with large-cap equity funds or blue-chip stocks to increase returns during market upswings. Meanwhile, investing a portion in fixed income - such as short or medium term bond funds – can provide further mitigation to downside risk. Additional diversification can be achieved by investing in gold or global asset allocation funds.

Allocation to balanced advantage funds can be increased gradually through systematic investment plans during volatile periods when prices are relatively lower. This rupee cost averaging approach reduces investment risks and allows investors to benefit from market rebounds. Thus, proper asset allocation utilising these flexible hybrid funds can empower investors with disciplined wealth creation.


Regular investments in balanced advantage funds can facilitate building a substantial corpus as well as a retirement nest egg over the long term. These funds provide a prudent investment avenue for meeting different financial objectives over time. Be sure to have a goal and rebalance your portfolio often to ensure you are on track.


How often should I rebalance my portfolio which includes balanced advantage funds?
The ideal practice is to rebalance a portfolio every 2-3 years. But an investor should ideally rebalance when they notice that the fund is not performing in-line with their goals.

Can I invest in a balanced advantage fund through SIP instead of lump sum?
Yes, balanced advantage funds allow systematic investment plans (SIPs) which help you benefit from rupee cost averaging.

How do I choose a suitable balanced advantage fund for my needs?
You should look at key aspects like the fund manager's experience and track record, asset allocation consistency over time, expense ratio and exit loads. Comparing performance metrics versus peers over different time periods provides insights into the fund's ability to generate optimal risk-adjusted returns.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.