In an evolving financial landscape, adding balanced advantage mutual funds to your investment portfolio is more crucial than ever before. Such funds play an essential role in allowing you to create a diversified investment portfolio. As these funds have witnessed a considerable rise in popularity, it is recommended that those lacking this investment in their portfolio consider investing in it in 2023. If you are unsure about the essential measures you must take to understand a suitable balanced advantage scheme for your investment portfolio, then continue reading. Explored here is the potential of investing in a balanced advantage scheme and the significance of adding this scheme to form a diversified portfolio.
What is a balanced advantage fund and why is it highly preferred?
Balanced advantage funds also addressed as dynamic asset allocation mutual funds aim at optimising your returns by managing dynamically the allocation between debt and equity instruments depending on the market conditions. This flexibility allows you to benefit from market opportunities while managing the associated market volatility.
You must consider including a balanced advantage fund in your investment portfolio in 2023 for various reasons. Firstly, such funds provide the potential for better risk-adjusted investment returns by adapting to the changing market phases. Next, they offer a disciplined take on asset allocation strategy, ensuring balanced stability and growth. Thirdly, they permit you to take part in the equity market upside while providing downside protection during market downturns. Fourthly, a balanced advantage mutual fund assists you to diversify your investment portfolio by exposing your investible to both debt and equity instruments.
What are the measures you must factor in while choosing a balanced advantage fund scheme for creating a diversified investment portfolio?
- Be well-versed with your risk tolerance level
Before investing, it is crucial to evaluate your investment goals, risk appetite level and investment time frame. This assists you in determining the proportion of your investible that must be allocated towards a balanced advantage mutual fund.
- Research the fund options
Perform in-depth research on the distinct balanced advantage mutual funds in the market. Assess the parameters such as track record, fund performance, expense ratio, investment philosophy and fund manager’s expertise. Select fund schemes that align well with your objectives.
- Strategically allocate the fund
Once you have chosen the suitable balanced advantage fund, ensure to determine the allocation percentage depending on your investment goals and risk profile. It is recommended that you consult with the investment advisor for customised advice.
- Periodically monitor and rebalance
Periodically monitor the balanced advantage funds’ performance and make sure they are in alignment with your financial strategy. In the case your allocation deviates considerably from your preferred asset allocation, then consider rebalancing your portfolio to maintain investment diversification.
- Stay informed
Ensure to keep yourself up to date about the economic indicators, market trends and changes in the fund’s investment strategy. This helps you in making an informed investment decision and adapt well to your investment strategy.
Conclusion
Including balanced advantage mutual funds in your portfolio is essential if you are seeking diversification benefits. Such funds provide a high potential for generating optimised risk-adjusted returns as well as adaptability to fluctuating market conditions. Just by factoring in the stepwise measures mentioned above, you can strategically include a balanced advantage fund in your investment portfolio, for a balance in stability and growth potential.
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