Most balanced advantage funds have failed to beat the benchmark in the 3-year period. The short-term performance (1 year) isn't great either as half of the schemes are struggling to match the performance of the benchmark Nifty 50 Hybrid Composite Debt 50:50 Index.
An analysis of data from Value Research shows that of the 20 balanced advantage scheme which are older than 3 years, only six schemes have outperformed the benchmark (up 13.3% annually in the last 3 years).
In the one-year period, 13 of the 25 schemes have outperformed the benchmark (up 9.16% in the last one year).
The analysis shows that in BAF, the performance depends a lot on the manager. This is because there is a huge variance in performances. For example, the highest return in the one-year period is 24.56% and the lowest is 2%.
Balanced advantage funds have gained traction in recent times as investors looked for alternatives amid valuation concerns in equities and poor returns of debt funds. As a result, the AUM of balanced advantage funds has risen 75% from Rs. 1 lakh crore in January 2021 to Rs. 1.75 lakh crore in January 2022.
