Balanced Advantage Fund: One should invest in Balanced Advantage Fund as it has very low volatility and aims to provide returns similar to equity funds in the long term.
The Indian economy is improving faster than expected. This is evidenced by high fuel and power consumption, increased freight and improved sales of medium and heavy commercial vehicles (MH&CV). In addition, with the improved macro-economic data, the corporate world has shown exceptional vitality in making a comeback from the lockdown period. With the expansion of margins, their sales have increased and due to the low base, there can be startling figures in earnings.
FII investment will remain strong even after the global interest rates are very low and the printing of notes by the central banks, because after all they want better returns. In this way, continuous cash, strong macroeconomic figures and better corporate profits will keep the markets strong. But the biggest risk that is raising the head is that of inflation.
Corona impacted supply chain
According to PGIM India Mutual Fund Senior Fund Manager, Equities, Anirudh Naha, Kovid has hit the unorganized sector, which has some role in every value chain of the entire industry. There has been a supply disruption, as the supply chain has been affected due to the slowdown in many businesses in the unorganized sector. The inability of the supply chain to keep pace with demand may increase inflationary pressures. In the past, we have said that in view of the weak global economic scenario, central banks would ideally hesitate to raise interest rates instead of showing more activity.
Balanced Advantage Fund
In such a situation, an option is seen of Balanced Advantage Fund. It is a fund that manages the allocation of assets fairly dynamically across the equity and debt segments. It adopts the ‘buy low and sell high’ model for long-term wealth creation. It provides excellent investment solutions for investors. Adopting a model-based approach helps to rebalance between equity and fixed income by investing in a natural way and saving tax and investors do not have to monitor themselves.
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Generally, the allocation of assets varies as per the changing economic situation in other mutual fund categories such as equity funds, but Balanced Advantage Funds strictly follow their own path and do not go beyond the limit set in the investment target. While investing in a Balanced Advantage Fund, an investor should keep in mind the risks, returns, costs, investment limits, financial goals, tax on returns etc.
Benefits of Balanced Advantage Funds
The asset allocation model adopted by such funds is of a cyclical nature. When the market climbs, it reduces investment in equity, and vice versa. The assets of such funds are actively managed between equity and debt. But in the end, the investor gets the benefit of buying from this fund at a low price and selling at a high price.
It takes care of a person’s asset allocation needs.
Investors can also opt for an SIP option to invest in a Balanced Advantage Fund to achieve long-term goals such as children’s education, marriage or retirement needs.
These funds are ideal for an emerging generation of professionals and entrepreneurs, who might not want to be tied to a traditional career, for people who want a dynamic career based on different skills, take risks to maintain their business ideas, Those who follow a traditional income do not want to fit into the groove and are looking for investment options that protect against the risk of a fall and the ability to earn returns is not affected in any way.
This also happens for people who are young and have a long life ahead, but do not want to adopt the traditional attitude nor do they want any risk on their investment funds. Investors who like smart way about actively managing their investments to maximize their returns. And finally for investors who are looking for a tax-saving dynamic asset allocation model.
Benefits of investing in a balanced Advantage Fund for retirement goals
Asset Allocation – This has the intrinsic feature of asset allocation. This is something that does not take time to get good results for your investment and it is a category in which this quality is done naturally.
Builds discipline – It develops discipline in you. You have to allocate your assets in the higher and lower cycles of the market. In this, the allocation of equity and fixed income keeps reset naturally and thus helps to maintain discipline.
Provides better protection from declines – Investors who want less volatility often opt for balanced funds as they earn income from bond allocation for a portfolio. Bonds provide a more stable return and usually do not face much volatility like stocks.
Good Returns – Balanced Advantage funds help you to get better returns per unit risk (which you are taking in an investment). Since we do not have enough time as an investor to keep an eye on the markets, Balanced Advantage Fund helps us to get better returns per unit risk.
Tax Benefit like Equity– Investor invests in one equity fund or in a fixed income instrument and invest in it or go out, it is better to opt for Balanced Advantage Fund which is also tax saving. . This is a category that has been designed in such a way that it provides tax benefits similar to equity funds.
Highs and lows
Thus, it can be said that Balanced Advantage Funds benefit the stability and alpha of an investment – both are important in terms of retirement. Therefore people should invest in Balanced Advantage Fund as it has very low volatility and they aim to provide returns similar to equity funds in the long term. Their goal is to provide permanent and regular income by investing in fixed income instruments. In this, investors get more tax savings than the asset allocation applied by the investors themselves. It is well defined and has proved itself from time to time without any bias. In the end, it is a bouquet of potential capital gains, capital protection and curb on volatility.
