What are balanced advantage hybrid funds?

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There are different types of mutual funds in the market that can help you grow your money over time. These mutual funds have been classified on the basis of a number of factors and can benefit you in unique ways, depending on your goals and investment amount. Balanced advantage hybrid funds are one such type of mutual fund. Keep reading to find out more about balanced advantage hybrids funds and whether or not they make for a good choice for your investment portfolio. 

What are balanced advantage hybrid mutual funds?

Balanced advantage hybrid funds, aka dynamic asset allocation funds, are a type of mutual funds that invest in equity and debt. These funds switch from equity to debt and vice versa depending on the prevailing market conditions. Balanced advantage hybrid funds are not subject to any exposure limits from the Securities and Exchange Board of India (SEBI). If the debt market is at a high, these funds move to debt from equity. This helps the fund not to suffer a loss when the stock market falls.

Balanced advantage funds can offer favorable returns in the long term. In fact, their returns are a lot similar to equity funds. However, they are a lot less volatile than the latter. Moreover, balanced advantage hybrid funds can perform in both flat and peaking markets.

What are the benefits of investing in balanced advantage hybrid mutual funds?

Here are the benefits of investing in balanced advantage hybrid funds:

  • The mutual fund is termed balanced as it provides a nice balance of equity growth and a debt fund’s safety.
  • Not only do they offer growth and capital appreciation, but they can also offer capital preservation.
  • Balanced advantage hybrid funds deliver good returns in the long term and can be ideal for long-term goals.
  • They can deliver returns close to equity mutual funds minus the latter’s volatility.
  • Since balanced advantage hybrid funds automatically switch from equity to debt and vice versa with the market, they require a lot less time and effort and can be ideal for passive investors.
  • Balanced advantage hybrid funds also invest in fixed income instruments and can hence provide you with a regular income, security, and safety.
  • These funds are suitable for investors with a low-risk profile. They can deliver good returns even at low risk.
  • Balanced advantage hybrid funds are also beginner-friendly as they are passively managed. Moreover, since the fund automatically switches from one asset class to another, the decision is free of manipulation or the personal bias of the fund manager.

Should you invest in balanced advantagehybrid mutual funds?

While balanced advantage hybrid funds can offer a host of benefits, the decision to invest in them can only be yours. You can add them to your investment portfolio if you are looking to earn equity-like returns but at a lower degree of risk. These funds are also suitable for you if you do not like to time the market yourself.

To sum it up

Balanced advantage hybrid funds can help you lower the risk on your portfolio while aiming for capital preservation and appreciation at the same time. Now that you know what these are, you can invest in them with Tata Capital Moneyfy App.

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