Best Mutual Funds: Best Balanced Advantage Funds or Dynamic Asset Allocation Funds to Invest in 2022

Mutual fund participants swear by balanced advantage funds or dynamic asset allocation funds. They believe these programs are ideal for new investors and conservative investors who want to enter the market without worrying too much about market levels and valuations. Read on if you want to know more about these diets.

Balanced Advantage funds invest in a mix of stocks, debt securities and arbitrage opportunities. These funds will decide on equity investments based on key market or internal parameters. They will invest less in equities when the market is very high or valuations are stretched. They will invest more in equities when the equities become available at attractive prices. In short, they do the job of juggling equity exposure for investors.

Of course, these funds limit exposure to stocks based on valuations, but does that make them really safe? Are they shockproof? Not really. Don’t fall for the false illusion that Balanced Benefits Funds are a safe investment. In fact, many mutual fund distributors make such statements. However, do not be swayed by such statements. Any mutual fund system that invests in stocks cannot be safe. Nor can it avoid volatility. Therefore, only invest in balanced advantage funds if you can tolerate the risk of investing in stocks. Also, only invest if you have an investment horizon of at least five years.

Is there anything else you should be aware of when investing in these programs? Yes, you need to make sure that the program does what it claims to be. Make sure the plan rebalances the portfolio in a timely manner. For example, there are programs that invest heavily in stocks even when the market is at a higher level or at high valuations. You have to make sure that you don’t get into such patterns.

If you are considering investing in balanced benefit programs, here are our recommended programs that you can consider investing in in the New Year.

Best balanced benefit funds to invest in 2022: used the following parameters to prequalify hybrid mutual fund systems.

Average sliding returns: Rolled daily for three years.

Consistency over the past three years: Hurst Exponent, H is used to calculate the consistency of a fund. The exponent H is a measure of the randomness of a fund’s NAV series. Funds with a high H tend to exhibit low volatility compared to funds with a low H.

i) When H = 0.5, the return series is called a geometric Brownian time series. This type of time series is difficult to predict.

ii) When H is less than 0.5, the series is said to have mean return.

iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger the trend of the series

The downside risk: We have only considered the negative returns given by the UCITS for this measure.

X = returns below zero

Y = Sum of all squares of X

Z = Y / number of days taken to calculate the ratio

Downside risk = Square root of Z


i) Share of equity: It is measured by Jensen’s Alpha for the last three years. Jensen’s alpha shows the risk-adjusted return generated by a mutual fund relative to the expected market return predicted by the Financial Asset Pricing Model (CAPM). A higher Alpha indicates that the performance of the portfolio has exceeded the returns predicted by the market.

Average returns generated by the MF Scheme =

[Risk Free Rate + Beta of the MF Scheme * {(Average return of the index – Risk Free Rate}

ii) Debt portion: Fund return – Benchmark return. The rolling daily rolling returns are used to calculate the performance of the fund and the benchmark index, then the active performance of the fund.

Asset size: For hybrid funds, the threshold asset size is Rs 50 crore

(Disclaimer: Past performance is no guarantee of future performance.)

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