Balanced Advantage Funds: Ensure fund's strategy matches your risk appetite

Conservative investors should prefer a valuation-based approach, while those with a higher risk appetite should go for a fund focused on momentum

HDFC Balanced Advantage Fund (BAF) recently crossed Rs 1 trillion in assets under management (AUM), becoming the second actively-managed scheme after Parag Parikh Flexicap to reach this milestone. The balanced advantage category (also called dynamic asset allocation funds) is also approaching Rs 3 trillion in assets. It had assets worth Rs 299,506 crore on May 31, according to the Association of Mutual Funds in India (Amfi).

Why investors are drawn to BAFs

Balanced advantage funds dynamically adjust equity and debt allocation in response to market conditions. “This flexibility lets investors participate in market growth while the fund aims to manage downside risks,