Before investing in a mutual fund scheme, investors tend to consider a number of factors ranging from the category it falls under, risk factors it carries, reputation of fund house running the scheme, and importantly — the past returns this scheme has delivered.
Here, we shortlist two mutual fund schemes that have delivered a return of more than 10 percent CAGR (compound annual growth rate) return in the past five years. At the outset, we would like to explain what are dynamic asset allocation funds?
What are dynamic asset allocation funds?
Balanced advantage funds, or dynamic asset allocation funds, are a type of hybrid mutual funds that invest across sectors including equity funds, real estate, stocks and bonds and change their allocation from time to time.
They are highly diversified in nature, and that's why 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 also in real estate and bond markets.
In these funds, the fund manager tends to switch their allocation to the respective asset class based on the market movements.
For instance, when the fund manager feels that equity valuations are attractive then the allocation to equities is raised and the corresponding allocation to debt is reduced.
| Dynamic asset allocation funds | 5-year-returns | AUM ( ₹crore) |
| Edelweiss Balanced Advantage Fund | 10.13 | 8,808 |
| HDFC Balanced Advantage Fund | 12.11 | 52,784 |
(Source: AMFI, regular returns on April 10, 2023)
As we can see in the table above, Edelweiss Balanced Advantage Fund gave a CAGR return of 10.13 percent in the past five years while HDFC Balanced Advantage Fund delivered a return of 12.11 percent per annum during the same period.
In other words, if someone had invested ₹one lakh five years ago, it would have grown to ₹1,62,004 and ₹1,77,101, respectively in these two schemes.
Let us learn more about these schemes:
Edelweiss Balanced Advantage Fund: This scheme was launched on August 20, 2009. It has given a CAGR return of 9.97 percent since its inception. This means if someone had invested ₹10,000 at the time of scheme’s launch, it would have grown to ₹36,731 as on April 12, 2023.
The key constituent stocks are ICICI Bank, RIL, HDFC Bank, Axis Bank, ITC, Infosys, HDFC, SBI and Bharti Airtel.
HDFC Balanced Advantage Fund: This scheme was launched on Feb 1, 1994. The scheme has given a return of 17.89 percent since its inception. This means if someone had invested a sum of ₹10,000 at the time of launch, it would have grown to ₹11,04,205 as on September 30, 2022.
The top constituent stocks in the scheme are GOI, SBI, Clearing Corporation, ICICI Bank, Coal India and HDFC Bank.
