Balanced advantage funds could be a better choice among all hybrid mutual funds since the fund manager can invest in a mix of debt, stocks, and arbitrage opportunities. Also, the fund manager can easily invest as there are no minimum or maximum allocation restrictions. The balanced advantage funds are considered equity funds for tax reasons, and 10% LTCG tax will be levied on gains more than Rs 1 lakh in a year.
As an investor, if you would like to take less risk, you could consider investing in hybrid funds such as balanced advantage funds. These funds involve limited risk and earn you overall returns between debt and equity. The equity allocation will be between 30% and 70% based on the market conditions.
You can consider investing in these funds when you intend to take less risk versus complete equity exposure. As per industry experts, it is essential to remain focused on your asset allocation and invest whatever surplus is available in equity to maintain the asset allocation.
If you are unable to decide on your asset allocation, you can consider investing in these funds as the fund manager will do the asset allocation in equities and debt based on the market conditions. Fund managers of balanced advantage funds lessen the equity exposure when the market valuations are at their peak and raise the equity exposure when the market valuations are low. Hence, as an investor, you will be able to gain from both the rising and dipping markets when you invest in these funds.
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Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.