Before opting for a mutual fund scheme, investors are meant to weigh the pros and cons of a slew of factors. These include their investment goals, risk appetite, category of mutual fund, fund manager’s expertise, expense ratio of scheme, reputation of fund house, so on and so forth.
One key factor, however, that is given disproportionately greater importance is the past returns delivered by that scheme.
Here we look at the past five-year returns of one such category i.e., dynamic asset allocation funds (also known as balanced advantage funds) which have given high returns. At the outset, let us understand what do these funds entail.
What are dynamic asset allocation funds?
Dynamic asset allocation mutual funds, or balanced advantage funds, are a type of hybrid funds that invest across sectors including equity funds, real estate, stocks and bonds and change their allocation from time to time.
They are diversified in nature, and it is highly unlikely for them to suffer losses during a bearish phase. They are considered best suited during an uncertain market. They invest not only in equity but in real estate and bond markets as well.
As we can see in the table below, the highest five-year compound annual growth rate (CAGR) returns were delivered by HDFC Balanced Advantage Fund that gave a return of 12.42 percent.
This was followed by Edelweiss Balanced Advantage Fund that gave a return of CAGR return of 10.01 percent.
|Dynamic asset allocation funds
|HDFC Balanced Advantage Fund
|Edelweiss Balanced Advantage Fund
|ICICI Prudential Balanced Advantage Fund
|Union Balanced Advantage Fund
|Sundaram Balanced Advantage Fund
(Source: AMFI, regular returns as on April 28, 2023)
ICICI Prudential Balanced Advantage Fund gave a return of 9.66 percent as on Apr 28, 2023 while other two schemes that gave single-digit CAGR returns are Union Balanced Advantage Fund and Sundaram Balanced Advantage Fund.
Here, we elaborate more on the top-performing dynamic asset allocation funds:
HDFC Balanced Advantage Fund: This scheme was launched on Feb 1, 1994. It has given a return of 17.82 percent (regular growth) since inception. This means if someone invested ₹10,000 then, it would have now grown to ₹11,96,536.
Its key constituent stocks include HDFC Bank, ICICI Bank, SBI, Coal India, NTPC, ITC and Infosys.
Edelweiss Balanced Advantage Fund: It was launched on Aug 20, 2009. Its AUM is now over ₹8,900 crore. It has delivered a return of 10.07 percent since inception.
This means if someone had invested ₹10,000 at the time of inception. It would have grown to ₹37,478 now.
Its key constituent stocks include ICICI Bank, RIL, HDFC Bank, HDFC, ITC, Axis Bank, Infosys, SBI, Bharti Airtel and TCS.