Balanced Advantage Funds: Make A Right Choice

Unlike static allocation strategies, balanced advantage funds (BAFs), also known as dynamic asset allocation funds, actively rebalance portfolios to suit changing market conditions. If the equities are overvalued, the managers might reduce equity exposure and allocate more to bonds or alternative investments. Also, if certain assets appear undervalued, the managers might increase exposure to these assets expecting mean reversion. The article explain the financial benefits that can be derived from such funds 

The equity market has been on a rollercoaster ride over the past three months. Benchmark indices have tumbled nearly 10 per cent before clawing back to a 5 per cent loss. Most sectors have struggled, with IT and banking indices being the rare exceptions that managed to stay out of the red. This volatility can be attributed to several factors: lacklustre September quarter earnings from India Inc., sustained selling by foreign institutional investors (FIIs), the strengthening US dollar, and rising US benchmark bond yields.