Balanced advantage funds steadily load up on equities as valuations ease

Equity exposure of most schemes now above 50%

Balanced advantage funds (BAFs), which adjust between stocks and bonds depending on market conditions, have increased their equity holdings over the past year, with most schemes now predominantly invested in equities.

 

Net equity exposure in the category had dropped to a low last August, as elevated stock market valuations titled the risk-reward scale towards debt.

 

Fast forward a year, the five largest schemes, excluding Edelweiss BAF, which follows a contrarian allocation model, held an average equity exposure of 55.5 per cent as of August this year, up from 42.8 per cent 12 months ago.

 

“BAFs have recently increased their net