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What is a balanced advantage fund and why should you invest in it?

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In the last few years, balanced advantage funds have showcased a lot of developments. Since the equity market always remains volatile, ICICI mutual funds such as ICICI prudential balanced advantage fund have received substantial inflow. More importantly, these balanced advantage funds are among the top rankers in the equity hybrid scheme.

 

For those who don’t know, a balance advantage fund basically invests in both equities and debts depending on the current conditions of the market. This process enables them to manage the risk and return. In this article, we will discuss what is a balanced advantage fund and what are the benefits of investing in them so that new investors can decide whether to invest in popular balanced advantage funds such as ICICI prudential balanced advantage fund or not.

Definition of a balanced advantage fund

A balanced advantage fund is a type of mutual fund that tends to invest in both the stocks and bonds available in the stock market. They are different from traditional hybrid funds. Here there is no time constraint which means they don’t need to retain the debt and equities they have invested in under specific limitations or certain criteria.

The balanced advantage funds can easily change their assets which is totally different from a hybrid fund. These particular mutual funds are also regarded as Dynamic Asset Allocation Funds due to their nature of adapting to the ever-changing stock market in a smooth way. For example, if currently the value of equities have high value then the fund manager can focus on the debts and if the stock prices become low they can concentrate on investing in equities.

Benefits of investing in a balanced advantage fund

Here is a list of benefits you will receive by investing in a balanced advantage fund:

Receive steady gains: One of the major benefits of investing in a balanced advantage fund such as ICICI prudential balanced advantage fund is that you will be able to receive steady gains on your investments. Since the balanced advantage fund invests in both equities and debts, investors can shield themselves against the volatility of the equity market through debt instruments. As a result of this process, the returns from this fund will be steadier than the equity-based mutual funds.

Dynamic allocation: Another essential benefit of investing in mutual funds like ICICI prudential balanced advantage fund is that it does not have the limitation implied by a hybrid or balanced fund. depending on the current market conditions these funds can change their asset allocation which in turn enable the investors to receive better returns on their investments.

Final words

Mutual funds like ICICI prudential balanced advantage fund are not for everyone because the investors do not have any kind of direct control over their investment funds. Due to its overly active nature, the fees can also be a bit on the higher side but at the same time, it has various benefits.

It is especially an ideal investment for beginners in the stock market because the risk is comparatively low and they can receive a steady income from their investments. If you are ready to receive the benefits of these funds then make sure to invest in them today.

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