HDFC MF reduces equity exposure in Balanced Advantage Fund to 57 per cent

As per the fund house, as on 30 November 2021, the unhedged equity exposure of HDFC Balanced Advantage Fund held 57.1% of the total assets as against 82.8% in April 2020. The fund’s equity exposure started falling from an all-time high of 83% since August 2020, as the market turned bullish. In August 2020, the BSE Sensex was trading in the range of 35,000-40,000. Equity exposure saw a gradual decline below 60% in October as the market hit the 65,000 level.

The reduction in equity exposure in the fund is significant as it is the largest scheme in the dynamic asset allocation category, which includes Balanced Advantage Funds. HDFC Balanced Advantage Fund had assets under management 41,319 crore till 30 November.

Amol Joshi, founder, said, “The whole objective of BAF is to dynamically manage its equity exposure, but HDFC BAF, unlike other BAFs, has fixed allocation (65-80% equity) for several years and the entire calendar year 2020. in over 80%.” Scheme Rupee Investment Services.

In terms of performance, the scheme has given returns of 34.9% on one year basis, 13.9 per cent on three year basis and 11.6 per cent on five year basis.

Balanced Advantage Funds are allowed to go 0-100% in Equity or Debt depending on the market conditions. Hybrid funds are preferred by investors as they seek to find a balance between growth and income by investing in both equity and debt.

Balanced advantage funds have seen a huge jump in popularity over the years. This is because asset management companies (AMCs) use derivatives to reduce the effective equity exposure in them to less than 65%, while maintaining an aggregate risk of over 65%. It ensures equity-like taxation at a low risk level.