HDFC Balanced Advantage Fund Review: Is It Good Investment?
One of the many reasons that makes the HDFC Balanced Advantage Fund a good investment is its versatile nature, meaning it is designed to adapt to varying market conditions like the bull and bear phases.
Moreover, belonging to a balanced advantage fund (BAF) category and unlike regular hybrid funds, it quickly adapts to market conditions, in bull markets it increases equity exposure, while during market corrections, it shifts to more conservative debt options. This flexibility is guided by the fund’s manager’s expertise.
But, “What sets this fund apart from its peers?”
Well, HDFC BAF is known for its ability to capitalize on market rallies and deliver superior risk-adjusted returns. How?
That's exactly what this detailed analysis will tell you. Starting with the performance over the years, stock quality and allocation of assets, experts will verify this fund inside out to say with complete surety whether it is a good investment for 2025 or not.
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Let’s start by learning its investment approach that has helped this fund give consistent returns over the years.
Investment Style of HDFC Balanced Advantage Fund
The investment style of HDFC Balanced Advantage Fund aims to provide you with long-term capital appreciation by investing in stocks like equity, debt and fixed income securities.
It keeps adjusting its asset allocation to further increase growth while minimizing risks. And the credit for successfully implementing such a unique investment style goes to Mr. Anil Bamboli.
Time to Talk About the Fund Manager: Mr. Anil Bamboli
Mr. Bamboli is a certified CFA (Chartered Financial Analyst) and holds a rich experience of more than 25 years in fund management and research.
The expert team at HDFC Mutual Fund keeps an eye on the market to check for any potential changes.
If they see any downfall, then they increase investment in equity stocks to attain higher growth. And if the market surges, then the allocation to fixed income stocks gets increased.
This way, your portfolio is saved from the potential negative impacts of market fluctuations.
Thus, by any means necessary, the HDFC Balanced Advantage Fund is to make sure that your portfolio grows in a sustainable manner.
You need to assess HDFC Balanced Advantage Fund returns before you decide on it. Move on to the next heading to track the performance of this fund.
Rolling Returns of HDFC Balanced Advantage Fund
The rolling returns of the scheme for 3 years are 18.22% which is way higher than the category average of merely 8.7%. You can refer to the graph below for an easy comparison of the scheme:
It is evident from the graph that the scheme has managed to give rolling returns almost 2 times higher than the category average. And it is not only in the case of 3 years, if you see the 5-year rolling returns of the scheme, you will find almost the same margin, if not higher.
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Now, the next parameter to identify whether Mutual Funds are a good investment or not is by looking at the quality of stocks. Let’s see to that.
Stocks Quality of HDFC Balanced Advantage Fund
The earnings ratio (12.54) and sales growth (14.55) of the fund are greater than the category average. This shows that the fund invests in companies with strong fundamentals.
However, if you see the P/E and cash flow growth ratios that are 14.54 and 17.28, respectively. You will find that they are slightly lower than the category average.
| Stocks Quality | ||||
|---|---|---|---|---|
| Fund Name | P/E | Earnings Ratio | Sales Growth | Cash Flow Growth |
| HDFC Balanced Advantage Fund | 14.54 | 12.54 | 14.55 | 17.28 |
| Category Average | 16.13 | 11.14 | 14.23 | 20.28 |
A low Price to Earnings Ratio means the scheme is investing in companies with stable growth (large cap companies).
And a low cash growth shows effective resource management and reinvestment of profits back into the scheme. This is to avoid the problem of having excess cash and making a profitable use of it.
To quote the great Muhammad Ali, “Even the greatest was once a beginner. Don’t be afraid to take that first step.”
Now let’s see what the debt quality of the fund is telling us about its performance.
Debt Quality of HDFC Balanced Advantage Fund
Looking at the given table below, the HDFC Balanced Advantage Fund has managed to get a higher credit rating of AAA than the category average, AA+, which means it can profitably invest in debt securities.
Yield to maturity, that is also weighted coupon, is 7.18% which is also higher than the category average (7%).
| Debt Quality | ||||
|---|---|---|---|---|
| Fund Name | Avg Credit Rating | Yield to Maturity (%) | Modified Duration | Effective Maturity |
| HDFC Balanced Advantage Fund | AAA | 7.18 | 4.35 | 7.43 |
| Category Average | AA+ | 7.00 | 3.09 | 4.14 |
The modified duration for the scheme is 4.35 and for the category average is around 3. This means that the fund is more sensitive to any kind of change in interest rates, which further shows that the final prices at maturity can also change.
Although the effective maturity of the fund is higher than the category average (4.14) but it suggests that the scheme can potentially give greater returns in the long term.
By now, you must be convinced how the fund provides you with the opportunity to earn great returns with stability. Now, let’s understand the reasons behind it.
Market Cap Allocation of HDFC Balanced Advantage Fund
The HDFC Balanced Advantage Fund Growth has invested around 86% in large cap stocks and 9% in mid cap stocks. And only 5% of the assets are allocated to small cap stocks.
You can refer to the graph below for a clear idea of market cap allocation:
This scheme mainly invests in large cap stocks to make sure that you get stable returns. And for rapid growth, it also invests in mid cap and small cap stocks.
This shows that the HDFC Balanced Advantage Fund is dedicated to providing its investors with balanced growth and protection from the downfall of the market.
Who Should Invest in Balanced Advantage Funds?
If you have the following traits within you, then this scheme is a perfect fit for you:
- Medium to long-term investment horizon
- Moderate risk-taking ability
- Wealth creation for the future
It does not matter whether you are a new investor or an experienced one. If you have the above traits, then you can start your investment journey with the fund.
Smart Investments, Bigger Returns
Now let us conclude this discussion with the final thoughts on the fund.
Final Thoughts
It is very rare to find a scheme in the market that can give you stable returns in the long term while protecting your portfolio from market fluctuations. You do not want to miss this opportunity to hit two birds with one stone.
And an interesting fact is that the minimum amount to start an SIP (Systematic Investment Plan) in the scheme is Rs 100 only. This makes it even more feasible for you. Thus, it can be said that this scheme is a win-win for investors.
