Hold on to your balanced advantage funds

As the markets turn volatile, investors should consider balanced advantage funds (BAFs) for better risk-adjusted returns . These are ideal as a core stabiliser in a portfolio for risk-averse investors or those seeking smoother returns without timing the market.

These funds dynamically manage allocation between equity and debt — cutting equity exposure when valuations are stretched and raising it when markets turn attractive. This helps in cushioning the downside during corrections while still participating in upturns.

With the Nifty 50 down about 6%, the Nifty Midcap 150 lower by 6.3%, and the Nifty Smallcap 250 off by nearly 9.5% over the past year, this is a good opportunity to add equities at relatively cheaper levels. “The performance of BAFs depends on each fund house’s alloca