As per the current scenario of awareness due to the exposure of BFAs or balanced advantage fund investments advantages are exciting in the current market conditions. Plenty of fund houses have recently opened the schemes whereas some others are creating awareness of the benefits of investing in BAFs.
Even the mutual fund managers or advisors are suggesting that conservative equity investors invest in dynamic asset allocation funds or BAFs for better gains. According to them, these schemes are evergreen despite market levels and valuations.
But get the total functional approach of the schemes and also its timely rebalancing feature of the portfolio. You can clear the doubt as there are schemes that are investing in a huge amount in stocks even in the market condition with expensive valuations. Beware of investing in such schemes.
What else can change the game in Balanced Advantage Fund?
Before initiating investments, you should go through the important aspects required to know about BAF.
Market volatility as a growth tool by BAfs
It’s known that the market is volatile and that can force investors to do mistakes as lessons. Maximum investors are not able to buy at low to gain profit by selling at high and this makes the market volatility remains there. But BAFs are using the volatility of the market as a growth tool to make the wealth creation pathway. The by default feature of dynamic asset allocation embracing the fund helps to regain the capacity to buy low and sell high. This makes the investors invest without fear in the funds and can be the right answer to, can NRI invest in mutual funds in India.
Dynamic Allocation Feature
The question arises with BAFs, can NRI invest in mutual funds in India? Definitely yes, they can invest in mutual funds on both full repatriation and non-repatriation ground. BAFs are not limited to pure balanced funds with a limited set of 65 to 70 % in equity and the rest in debt. BAFs actively change their asset allocation as per the regular daily valuation. So, with the flexibility in investment with the freedom associated with up to 80 % in equity and 30% on the low side, BAFs reduce or hike up concerning debt exposure with an effective valuation of equity. Thus BAFs carry a mixture of returns in the long term and ruin inflation with better returns compared to the traditional balanced fund or debt.
SBNRI is an authorised Mutual Fund Distributor platform & registered with Association of Mutual Funds in India (AMFI). ARN No. 246671
Valuation Strategy for Stocks
BAFs forward with smart strategy-based steps to take the cost to book (p/b) as the valuation model during the selection of the stocks. It is different from the general practice of valuation following the stocks based on the cost-to-earnings (P/E) ground. Whereas the market experts indicate that the p/b model is less volatile than the P/E strategy. Thus, BAFs are beneficial for investors.
BAFs like other equity mutual fund holds the diversification of portfolios that are expanded embracing mid-cap stocks and large-cap stocks. The result-oriented nature of BAFs due to the strong stock composition, the mutual funds trigger to have the stability of huge and rooted companies. It provides consistent growth capabilities to the mid-sized companies too and supports. The diversification investment portfolio doesn’t allow risk factors to crush the wealth generation and also supports investors with great returns.
The returns generated by BAFs are much better and more stable in comparison to the pure equity fund. It reduces the downfall in investment valuation in the low market condition. With the relaxed feature of BAFs, investors focus on wealth creation effectively.
Investors are scared of investments due to the market’s ups and downs. It is because the diverse condition can not only make you face the wealth downfall but also can damage your frequent journey further. Smart investors can transfer their assets to BFAs to prevent them from market fall.