High volatility has rocked the market over the past few weeks. While the long term outlook for Indian equities remains strong, investors should be prepared for volatility in the short term. Asset allocation can provide stability to your investment portfolio in uncertain market conditions. The strong rally in 2023 had taken the market to record highs, but at the same time has raised concerns about valuations. In such conditions, dynamic asset allocation or balanced advantage funds, which manage their asset allocation dynamically based on relative valuations or market levels can be suitable investment options for investors who want a stable investment experience. In this article, we will discuss about Bank of India Balanced Advantage Fund, one of Top 3 balanced advantage funds in the last 3 years.
The fund was launched around 10 years back and has given 14.5% CAGR returns in the last 3 years (see the chart below). You can see that the fund performance was comparable with Nifty, even though risk profile of the fund is significantly lower than Nifty or a pure equity fund.
Source: Advisorkhoj Research, as on 14th May 2024
One the main reasons for investing in hybrid funds is to reduce portfolio volatility. That is why we urge you to consider both risks and returns when investing in hybrid funds. The table below shows some of biggest drawdowns (market corrections) since the inception of BOI Balanced Advantage Fund. You can see that BOI Balanced Advantage Fund had much smaller corrections compared to Nifty. In other words, the fund was able to limit downside risk of investors in volatile market conditions, while giving returns comparable to Nifty over sufficiently long investment horizon. This shows that the robustness of the dynamic asset allocation strategy of the fund.
Source: Advisorkhoj Research, as on 14th May 2024
The chart below shows the 3 year rolling returns of Bank of India Balanced Advantage Fund over the last 5 years or so (since 1st January 2019) versus the dynamic asset allocation funds category average. We are showing 3 year rolling returns since investors should have minimum 3 year investment tenures for Balanced Advantage Funds. You can see that the fund was able to beat the category average fairly consistently over 3 year investment tenures across different market conditions. The average rolling return of Bank of India Balanced Advantage Fund for 3 year investment tenure was 9.73% (versus category average rolling return of 9.37%). The median rolling return of Bank of India Balanced Advantage Fund for 3 year investment tenure was 10.65% (versus category median rolling return of 9.37%).
Source: Advisorkhoj Rolling Returns, as on 30th April 2024
The chart below shows the 3 year rolling return distribution of Bank of India Balanced Advantage Fund versus the dynamic asset allocation funds category average. You can see that Bank of India Balanced Advantage Fund was able to give 10%+ CAGR returns much more consistently compared to the peer funds in the dynamic asset allocation funds category.
Source: Advisorkhoj Rolling Returns, as on 30th April 2024
The table below shows the annual quartile ranking of Bank of India Balanced Advantage Fund since its launch. You can see that the fund has been able to claim a spot in the top 2 quartiles for the last 3 consecutive years. The fund had underperformed from 2016 to 2021, but has made a strong recovery since then. We will continue to monitor if the fund is able to retain its place in the upper quartiles in the coming years.
Source: Advisorkhoj Quartile Ranking, as on 30th April 2024
The chart below shows the growth of Rs 10,000 monthly SIP in Bank of India Balanced Advantage Fund over the last 5 years. With a cumulative investment of Rs 6 lakhs, you could have accumulated a corpus of more than Rs 8.5 lakhs. The SIP XIRR over the last years was nearly 14%.
Source: Advisorkhoj SIP Returns, as on 14th May 2024
Investors should consult their financial advisors or mutual fund distributors if Bank of India Balanced Advantage Fund is suitable for their investment needs.
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.
Bank of India Investment Managers Pvt. Ltd. has continuously proved to be trustworthy with 15 years of rich experience in fund management and has always catered to the needs of the investors across various objectives, thus leading to a portfolio of 18 varied Mutual Fund Schemes with 3.4 lakhs+ investors and ₹ 5,225.12 crores assets under management (as on September 30, 2023) and 12 branches across PAN India as on September 30, 2023.