The returns delivered by mutual funds in the recent past is seen as one of the key factors that help determine their future performance. However, there are a number of other factors as well that go into evaluating the mutual fund scheme’s overall performance such as macro-economic factors, fund house’s reputation, selection of stocks, among others.
Here, we assess the balanced advantage funds and returns delivered by one of the top-performing schemes in this category i.e., Baroda BNP Paribas Balanced Advantage Fund. But before we proceed, we want to define what exactly are balanced advantage funds.
Balanced Advantage funds, also known as Dynamic Asset Allocation Funds, are hybrid mutual funds. In these funds, the asset allocation between the two asset classes - equity and debt - is quite dynamic and changes based on the prevailing stock market conditions.
For instance, if the market index is trading higher, the fund manager may tweak the asset allocation towards debt. When stock prices are lower, the shift could be towards equities.
Baroda BNP Paribas Balanced Advantage Fund was launched on November 14, 2018 and its three-year returns were as high as 16.41 percent for regular investors whereas the direct investors got an annualised return of 18.02 percent per annum.
| Tenure | Returns (%) | If invested ₹10,000, it would be |
| 1 year | 8.02 | 10,802 |
| 3 years | 18.02 | 16,438 |
| Since inception | 13.02 | 15,824 |
(Source: AMFI data; direct returns as on August 18, 2022)
The fund has given a return of 13.02 per cent since inception. This means if an investor had invested ₹10,000 at the time of fund's launch, the investment would have grown to ₹15,824 by now.
Similarly, the past one and three-year direct returns as on Aug 18, 2022 were 8.02 percent and 18.02 percent, respectively.
According to the information shared by the asset management company, the assets under management (AUM) of this fund scheme is ₹3,459 crore and minimum application amount is ₹5,000 and for additional allocation, the minimum application amount is ₹1,000.
The investors who want to invest via SIPs (systematic investment plan) can invest a minimum of ₹500 per month or else, ₹1,500 per quarter.
The benchmark index is Nifty 50 Hybrid Composite Debt 50:50 index and scheme's standard deviation is 11.92 percent. Read here about the significance of standard deviation in assessing a mutual fund's performance.
Among the constituents of fund, equity holdings comprised 69.4 percent and sovereign bonds were 23 percent of the overall portfolio.
Top five stocks among the equity portion were Reliance Industries, ICICI Bank, Infosys, NTPC and HDFC Bank.
The top sectors in the fund were banks (11.6%), IT-software (6.5%), pharma & biotech (5.3%), petroleum (5.2%) and finance (3.7%).
