Long-term investors who want equity and debt in their portfolios, along with a strategy of buying stocks when they are low and selling them when they are high, can opt for balanced advantage funds.
The Balanced Advantage Fund (BAF) category—officially known as Dynamic Asset Allocation / Balanced Advantage Funds under AMFI/SEBI hybrid schemes—is one of the most popular hybrid fund categories in India.
Balanced advantage funds (BAFs) invest in a mix of debt and equity. The equity allocation is dynamically determined based on the fund manager’s view of the market and could move between 30% and 80%.
Fund managers use a documented process to decide the allocation between equity and debt. Typically when market valuations are high, the allocation may tilt more towards debt and when they turn cheap, towards equity. This helps investors maintain asset allocation. In comparison, regular hybrid funds keep allocation between equity and debt static and within the prescribed regulatory limits.
How Big Is The BAF Category?
As of Jan 31, 2024, 34 schemes were in the BAF space, with over 5 million folios managing assets worth ₹2.83 lakh crore.
What Asset Allocation Models Do BAFs Use?
Fund houses have created their own models to determine how to split investments between equity and debt. Most follow a pro-cyclical approach, buying more equity when valuations are low. Fund managers often rely on a mix of fundamental and technical indicators, such as price-to-earnings and price-to-book ratios, along with trend signals like daily moving averages, to decide on equity allocation.
India’s five largest BAFs as of March 2026:
- HDFC Balanced Advantage Fund
- ICICI Prudential BAF
- Edelweiss Balanced Advantage Fund
- Kotak Balanced Advantage Fund
- SBI Balanced Advantage Fund
BAF is a go-to "all-weather" option for many investors.