HDFC Balanced Advantage Fund

HDFC Asset Management Company Ltd. (HDFC AMC) is one of the largest mutual fund companies in India. It is among one of the most profitable asset management companies (AMC) in the country.

The company manages assets worth Rs. 4,32,084.97 crores as of Mar 31, 2022. Let us talk about the consumer product – HDFC Balanced Advantage Fund.

HDFC Balanced Advantage Fund

Investment objective

To provide long-term capital appreciation/income from a dynamic mix of equity and debt investments.

Investment process

The fund follows the following investment strategy

1. Equity Portfolio Construction

• Active management of equity portfolio focusing on stock selection. The process is based on the troika of quality assessment, earnings outlook, and valuations, with equal importance to each criterion. Additionally, positioning across sectors/market capitalization is given due importance and risk mitigation is achieved through appropriate sizing of exposure

2. Debt Portfolio Construction

• Active management of debt portfolio focusing on managing credit risk. The fixed-income investment philosophy emphasizes Safety, Liquidity, and Returns (SLR) in that order.

Portfolio Composition

The portfolio holds the major exposure in equity at 60% and the sectoral major exposure is Financials which accounts for roughly one-fifth of the portfolio. The top five sectors hold nearly 43% of the portfolio.

Top 5 Holdings for HDFC Balanced Advantage Fund

Name	Weightage %
HDFC Bank	4.87
State Bank of India	4.57
Coal India	4.31
ICICI Bank	4.31
NTPC	3.46

Performance

Fund name	1Y	3Y	5Y	7Y	10Y
HDFC Balanced Advantage Direct-Growth (%)	17.77	20.64	12.56	15.47	15.33
VR Balanced TRI* (%)	7.44	15.25	11.36	13.07	12.13
Hybrid: Dynamic Asset Allocation* (%)	6.96	11.68	8.65	10.47	11.69

Fund managers

Mr. Srinivasan Ramamurthy (Since July 29, 2022) – Fund Manager – Equity – Collectively over 15 years of experience in equity research and fund management.

Mr. Gopal Agrawal (Since July 29, 2022) – Collectively over 17 years of experience in Fund Management and 2 years in Equity Research

Mr. Anil Bamboli (Since July 29, 2022) – Senior Fund Manager – Fixed Income – Collectively over 27 years of experience in Fund Management and Research, Fixed Income Dealing.

Mr. Priya Ranjan (Since May 01, 2022) – Collectively over 15 years of experience. Senior Equity Analyst and Fund Manager for Overseas Investments

Mr. Arun Agarwal (Since October 06, 2022) – Senior Fund Manager – Collectively over 23 years of experience in equity, debt, and derivative dealing, fund management, internal audit, and treasury operations.

Mr. Nirman S. Morakhia (Since February 15, 2023) – Fund Manager and Dealer – Equities

Who should invest in HDFC Balanced Advantage Fund?

Investors looking to invest in an equity portfolio without the very high risk and with a differentiated portfolio strategy that is well diversified in terms of asset class, and can take bets depending on the overall macro-economic environment.

Why invest in this Fund?

• BAFs are multi-dimensional in nature. When a market is overvalued, it inherits the qualities of a hybrid mutual fund scheme, with the ability to minimize equity exposure to up to 30%. Whereas, when a market is undervalued, BAFs can raise equity exposure to up to 80 percent.
• In stock, picking funds emphasizes earnings growth prospects, management, valuation, macro trends, etc., and is agnostic to market capitalization and does not have sectoral bias.
• Lastly, investors experience the optimum advantages of both asset classes ─ equity and debt.

Horizon

• One should look at investing for a minimum of three years or more.
• Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.

Conclusion

The HDFC Balanced Advantage Fund is one of the oldest funds with a track record of nearly three decades and has delivered over 15% CAGR since its launch.

Thus, it is best for investors who are willing to take some additional risk for good returns over a long-term spectrum.

Disclaimer
This is not recommendation advice. All information in this blog is for educational purposes only.