Evaluating the returns given by a mutual fund is central to judging its overall worthiness. Although investors are advised to factor in other considerations as well such as the category of mutual funds, performance of fund manager, creditability of fund houses and other macro-economic factors — the past performance tends to occupy a central role among the key factors considered by potential investors.
Here we look at the past performance given by dynamic asset allocation funds, particularly in the past three years. For the unversed, dynamic asset funds (also known as balanced advantage funds) are actively managed funds which invest across a number of sectors including equity, real estate, stocks, and bonds.
Fund managers tweak the allocation of asset classes in these fund schemes to align with changing market conditions.
These dynamic asset mutual funds have given a compound annual growth rate (CAGR) of more than 15 percent in the past three years.
These include Baroda BNP Paribas Balanced Advantage Fund that gave a CAGR return of 15.55 percent in the past three years while the benchmark index gave a return of 12.51 percent.
Other funds in the category of dynamic asset allocation funds include HDFC Balanced Advantage fund (that gave a return of 17.71 percent), Sundaram Balanced Advantage Fund (with 14.33 percent) and Edelweiss Balanced Advantage Fund (with 14.88 percent).
Mutual Funds | 3-year returns (%) | Benchmark (%) |
HDFC Balanced Advantage fund | 17.71 | 12.51 |
Baroda BNP Paribas Balanced Advantage Fund | 15.55 | 12.51 |
Edelweiss Balanced Advantage Fund | 14.88 | 12.51 |
Sundaram Balanced Advantage Fund | 14.33 | 12.51 |
(Source: AMFI data of regular returns as on Nov 30, 2022)
However, the past five-year-returns of these mutual fund schemes were different and their annual growth rate returns were relatively lower.
Mutual Funds | 5-year-returns (%) | Benchmark (%) |
HDFC Balanced Advantage fund | 11.33 | 11.20 |
Edelweiss Balanced Advantage Fund | 11.16 | 11.20 |
Sundaram Balanced Advantage Fund | 9.57 | 11.20 |
As we can see the table above, none of these funds delivered more than 15 percent return in the past five years. HDFC Balanced Advantage fund gave 11.33 percent against the benchmark return of 11.20 percent. Edelweiss Balanced Advantage Fund gave 11.16 percent return and Sundaram Balanced Advantage Fund gave 9.57 percent return.
Meanwhile, Baroda BNP Paribas Balanced Advantage Fund does not have five-year returns since the scheme was launched four years ago.
Here we take a look at a couple of the top-performing balanced advantage funds:
HDFC Balanced Advantage fund: This fund was launched on September 11, 2000. It has given a return of 16.67 percent since inception. This means if someone had invested ₹one lakh that time, it would have grown to ₹30,89,172.
Edelweiss Balanced Advantage Fund: This was launched on August 20, 2009. It has given a return of 10.37 percent since inception. This means if someone had invested ₹one lakh at the time of launch, it would have grown to ₹3,73,303. The fund has an AUM of ₹9,108 crore. Its key constituent stocks are ICICI Bank, RIL, HDFC Bank, Axis Bank, Infosys, ITC, SBI, Bharti Airtel, HDFC and L&T.