When investors make a decision to invest in a mutual fund scheme, they weigh a number of factors ranging from the historical returns to the fund house’s reputation, and overall market scenario to the future outlook.
One of the key considerations that investors invariably factor in is the performance of the mutual fund scheme in the recent past.
Here, we discuss some schemes of a mutual fund category — dynamic asset allocation — which have given good returns, i.e., better than that of their corresponding benchmark index.
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A benchmark index is a standard against which a mutual fund scheme’s performance is measured. Beating the benchmark index is an indication of the scheme's good performance.
At the outset, let us understand what exactly are dynamic asset allocation funds
These mutual funds, also known as balanced advantage funds, refer to investment instruments, which invest in equity/ debt instruments that are managed dynamically (0 to 100 percent in equity & equity-related instruments) and similar proportion in debt instruments at the same time, as per the Sebi’s categorisation of mutual fund schemes.
These are some of the top-performing dynamic asset allocation funds, which have managed to beat the benchmark index.
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As we can see in the table below, the top-performing scheme (HDFC Balanced Advantage Fund) delivered an annualised return of 25.90 percent in the past three years. The distant second in terms of 3-year returns is Bank of India Balanced Advantage Fund which gave a CAGR return of 15.12 percent. This is followed by Baroda BNP Paribas Balanced Advantage Fund which gave a return of 14.50 percent.
| Dynamic asset allocation funds | Returns (%) |
| HDFC Balanced Advantage Fund | 25.90 |
| Bank of India Balanced Advantage Fund | 15.12 |
| Baroda BNP Paribas Balanced Advantage Fund | 14.50 |
| Edelweiss Balanced Advantage Fund | 13.98 |
| ICICI Prudential Balanced Advantage Fund | 13.49 |
| Nippon India Balanced Advantage Fund | 13.33 |
| Tata Balanced Advantage Fund | 13.05 |
| Axis Balanced Advantage Fund | 12.90 |
| Invesco India Balanced Advantage Fund | 12.83 |
| ITI Balanced Advantage Fund | 12.59 |
(Source: AMFI; Returns as on April 30, 2024)
Other schemes which delivered an annualised return higher than 12 percent included Tata Balanced Advantage Fund (13.05%), Nippon India Balanced Advantage Fund (13.33%), ICICI Prudential Balanced Advantage Fund (13.49%) and Edelweiss Balanced Advantage Fund (13.98%).
Needless to say the past returns of a mutual fund scheme (just like a stock) do not guarantee its future performance. In other words, if a scheme has delivered a good performance in the past, it doesn’t mean that it will continue to give similar returns in the near future as well. Markets are volatile, and so are the returns.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.