What are Dynamic Asset Allocation or Balanced Advantage Funds?
Dynamic Asset Allocation or Balanced Advantage Funds are hybrid funds, which are free to manage their exposure to equity and debt instruments without any caps or minimum exposure limits from the SEBI. These funds change their exposure to equity and debt instruments as per the changing equity valuations with the help of their in-house proprietary models. These models help their funds to eliminate human biases during investment decision making. They also maintain exposure to equity derivatives to implement hedging strategies and benefit from equity tax treatment during overvalued equity market conditions.
Why Invest in Dynamic Asset Allocation or Balanced Advantage Funds?
- Aims to deliver long-term returns closer to equity funds but with significant lower volatility
- Combines the features of potential capital appreciation, capital preservation and volatility control
- Aims to generate capital gains primarily through dynamic management of equity allocation as per varying market conditions
- Aims to provide stability and regular income through exposure to fixed income instruments
- Portfolio rebalancing decisions are usually based on a well-defined and time tested models without any biases
- Offers higher tax efficiency than asset allocation implemented by the investor himself
Also Read: Best Aggressive Hybrid Funds
Top 10 Balanced Advantage/Dynamic Asset Allocation Funds
| Fund Name | Returns (%) | |||
| 1 year | 3 year | 5 year | 10 year | |
| HDFC Balanced Advantage Fund | 2.38 | 19.75 | 23.22 | 15.16 |
| Baroda BNP Paribas Balanced Advantage Fund | 5.62 | 15.54 | 15.97 | – |
| Invesco India Balanced Advantage Fund | 4.86 | 14.89 | 14.23 | 10.89 |
| Axis Balanced Advantage Fund | 5.69 | 14.77 | 14.69 | – |
| SBI Balanced Advantage Fund | 4.81 | 14.68 | – | – |
| Mahindra Manulife Balanced Advantage Fund | 3.23 | 14.65 | – | – |
| Aditya Birla Sun Life Balanced Advantage Fund | 6.82 | 14.15 | 14.98 | 12.02 |
| ICICI Prudential Balanced Advantage Fund | 7.91 | 13.94 | 15.08 | 11.97 |
| Mirae Asset Balanced Advantage Fund | 5.71 | 13.66 | – | – |
| Nippon India Balanced Advantage Fund | 4.60 | 13.51 | 14.97 | 10.99 |
Data as on August 21, 2025
Who Should Invest in Dynamic Asset Allocation Funds?
- Investors seeking to create long term wealth with lower volatility
- Those seeking exposure to equity and debt asset classes with a dynamic asset allocation
- Those wishing to participate in equity markets with a relatively conservative approach
- Fresh mutual fund investors seeking to gain equity market exposure with lower volatility
- Intermediate investors looking for an automated solution during over-valued or confusing market conditions
- Experienced investors seeking an automated asset allocation model from the fund house itself
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