Assessing the past returns of a mutual fund scheme plays an instrumental role in gauging the potential of its future earnings. Although other factors such as stock fluctuation, diversity embedded in the fund scheme, past performances of fund managers managing the fund, credibility of fund house and the overall macro-economic factors play their part; the past returns given by the fund scheme have a strong bearing on the performance nevertheless.
Here we evaluate the returns posted by dynamic asset allocation funds in the medium term i.e., in the past three and five years. First and foremost, we explain the nuances of dynamic asset allocation funds.
What are dynamic asset allocation funds?
These funds are also known as balanced advantage fund, and they are actively managed and invest in a blend of equity and debt based on market movements. Depending on the changes in stock markets, they increase or decrease their allocation to different asset classes i.e., equity and debt.
Some fund schemes gave low returns such as Motilal Oswal Dynamic Fund gave 5.20 percent, Invesco India Dynamic Equity Fund gave 6.90 percent return and L&T Balanced Advantage Fund delivered 7.94 percent return.
The top-performing funds (as shown in the table below) in the same category gave returns in the range of 12-14 percent.
For instance, Baroda BNP Paribas Balanced Advantage Fund gave 13.22 percent and Edelweiss Balanced Advantage Fund delivered 13.75 percent return.
|Mutual fund||3-year-returns (%)|
|Baroda BNP Paribas Balanced Advantage Fund||13.22|
|Edelweiss Balanced Advantage Fund||13.75|
|Sundaram Balanced Advantage Fund||12.42|
|Tata Balanced Advantage Fund||11.91|
(Source: AMFI data as on June 30, 2022)
It is important to note that some of the fund schemes delivered dismal returns in the past five years, i.e., in the single digits. For example, Bank of India Balanced Advantage Fund (direct) offered 4.29 percent, Motilal Oswal Dynamic Fund gave 5.67 percent return and L&T Balanced Advantage Fund gave 7.77 percent return in the past five years as on June 30, 2022.
The top-performing funds, on the other hand, gave direct returns in the range of 10-12 percent as shown in the table below. Edelweiss Balanced Advantage Fund gave 11.38 percent, HDFC Balanced Advantage Fund gave 10.52 percent and ICICI Prudential Balanced Advantage Fund gave 10.42 percent return.
|Mutual fund||5-year-returns (%)|
|Edelweiss Balanced Advantage Fund||11.38|
|HDFC Balanced Advantage Fund||10.52|
|ICICI Prudential Balanced Advantage Fund||10.42|
One of the top-performing funds in this category is Edelweiss Balanced Advantage Fund. Let us find more on this particular scheme.
Edelweiss Balanced Advantage Fund
The scheme was launched on August 20, 2009. Since inception, the scheme has given a return of 10.9 percent. In other words, if someone had invested ₹1,00,000 at the time of inception, it would have swelled to ₹3,47,578.
More than 1,96,000 investors have already invested into the scheme with total AUM of ₹7,964 crore. The expense ratio of fund scheme is 1.82 percent.
The top stock holdings in the scheme are RIL, ICICI Bank, HDFC Bank, Infosys, Axis Bank, SBI, ITC, Hindustan Unilever, L&T, TCS, HDFC, Bharti Airtel and Maruti Suzuki.