Home / Money / Q&a /  Should I exit HDFC Balanced Advantage Fund?
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Kindly advise whether to keep holding of HDFC Balanced Advantage Fund for the last three and a half years. Value of fund is consistently lesser by 7%. However, some dividend is being paid regularly. Say 0.230 per unit.


Balanced Advantage Funds are hybrid funds that invest in both equity and debt. The allocation across equity and debt is not fixed and keep changing based on the market outlook and views of the fund management team. Balanced Advantage Funds are good for conservative investors who are looking to generate higher returns than debt with limited risk.

However, HDFC Balanced Advantage Fund is managed more aggressively than its peers and does not use derivatives to reduce its equity exposure below 65% of the corpus. The fund at present has close to 70% in equity whereas the peers had lower equity allocation. At the current market level from a return perspective, this fund would have generated a higher return compared to peers from the balanced advantage category because of high equity allocation, but it also adds more volatility. You cannot compare balanced advantage hybrid funds with equity diversified funds as the fund will have a reasonable allocation in debt all the time. The fund has given returns of close to 18% p.a. in the last three years which is fair considering it is a balanced fund and market conditions during the period. If your investment horizon continues to be long-term even after holding it for three years and at the same time you want to take limited risk then you may continue to hold on with your investment in HDFC Balanced Advantage Fund. If you would like to take some additional risk and are willing to give more time then you can switch into an equity diversified fund where your money will be invested in equities only.

- Answer by Harshad Chetanwala, founder

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