Why Invest in Dynamic Asset Allocation Funds
For the month of January 2022, Dynamic Asset Allocation/Balanced Advantage funds in the hybrid category recorded the second highest positive inflow of Rs 2,762.95 Cr. Dynamic Asset Allocation funds recorded Rs 1,73,958.68 Cr as net assets under management and Rs 1,74,985.91 Cr as average net assets under management for the month of January 2022. These data according to the Association of Mutual Funds in India (AMFI) clearly indicate that the appetite for the underlying assets tends to increase during periods of market instability.
Depending on how the market moves, the fund managers of this fund dynamically increase or decrease the equity allocation. Simply put, when markets are fair, the fund manager increases equity exposure and decreases debt exposure. When markets are overvalued, the fund manager reduces equity exposure and increases debt exposure.
Therefore, the fund can offer you long-term growth potential while reducing your risk from debt exposure. The fund’s equity investments help you take advantage of long-term growth potential, while the fund’s debt investments protect your portfolio from falling stock prices.
Following extreme stock market crashes resulting in higher stock readings, this method significantly protects you from negative downside by providing you with risk-adjusted returns. This fund allows you to diversify your portfolio for better returns against inflation by not putting all your eggs in one basket.
Dynamic asset allocation funds are not too volatile as they invest in multiple asset classes such as equities, debt, equity derivatives, real estate, etc., reducing the influence of turbulence of the market. Here are two dynamic asset allocation funds rated 5 stars by Value Research based on your lower risk appetite and medium to long-term goals.
Baroda Dynamic Equity Fund Direct Growth
Value Research gave this Dynamic Asset Allocation mutual fund program a 5-star rating and it launched on November 14, 2018. According to Groww, Baroda Dynamic Equity Fund Direct-Growth’s recent 1-year returns are 12 .25% and it has provided average annual returns of 17.46% since inception.
The equity segment of the fund is primarily invested in the financials, technology, energy, healthcare and consumer staples sectors. The top five holdings in the fund are GOI, Infosys Ltd., Reliance Industries Ltd., ICICI Bank Ltd. and Sun Pharmaceutical Inds. ltd. The fund now has a 43.3% allocation to equities and a 28.20% exposure to debt.
The fund has an expense ratio of 0.77%, and Baroda Dynamic Equity Fund Direct-Growth has Rs 1,903.43 Crores in Assets Under Management (AUM) as of February 12, 2022, and the net asset value of the fund is Rs 16.86 as of February 11, 2022.
According to ET, the fund’s 1-year rolling returns are 19.8%, 18.39% over 3 years and 18.58% over 5 years and the fund’s class returns are 18.18% over 1 year, 11.17% over 3 years, 9.52% over 5 years. year. The SIP in this fund can be started from Rs 500 per month.
Edelweiss Direct Growth Balanced Advantage Fund
This dynamic asset allocation mutual fund program received a 5-star rating from Value Research and was founded on January 1, 2013. The direct returns of the Edelweiss Balanced Advantage Fund over the past year are 13.56% and since inception it has generated an average annual return of 13.20% according to Groww.
The fund’s equity allocation is primarily committed to the financials, technology, energy, consumer staples and automotive sectors. HDFC Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., GOI, Infosys Ltd. are the top 5 holdings of the fund. The fund now has a 59.9% allocation to equities and a 20.9% allocation to debt, and it has an expense ratio of 0.45%, which is lower than most other funds in the industry. same category.
The current net asset value of the Edelweiss Balanced Advantage Fund – Direct Plan is Rs 39.1 as of February 11, 2022, and the fund currently has assets under management of Rs 7,353 crores as of February 12, 2022.
According to ET, the fund’s one-year rolling returns are 24.93%, 17.62% over three years, 15.52% over five years and 13.32% since inception. The minimum amount of SIP is capped at Rs 500 in this fund.
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