Fund of Fortnight

This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. [EasyDNNnews:PaidContentStart]

Reason for recommendation 

After experiencing a correction over the past few months, the Indian equity market is showing signs of stabilisation, though risks remain. At the same time, bond yields have been consistently declining. In this context, dynamic asset allocation funds, which invest in both equity and debt, appear well-suited for navigating the current market conditions. Our top pick for this strategy is HDFC Balanced Advantage Fund, a category leader with a 30-year track record. 

This fund has consistently outperformed its peers, delivering returns of 23.42 per cent over one year (compared to the category’s 19.58 per cent), 23.12 per cent over three years (versus 13.73 per cent), and 21.72 per cent over five years (versus 14.73 per cent). The dynamic asset allocation strategy has allowed the fund to capitalise on market opportunities and deliver superior long-term performance. Much of the recent success can be credited to fund manager Gopal Agrawal, who took over in July 2022 after Prashant Jain’s departure. 

Agrawal’s approach is more flexible compared to Jain’s, who maintained a 70-75 per cent equity allocation. Agrawal dynamically adjusts the allocation between equity and debt, fully leveraging the fund’s mandate to adapt to market  conditions. On a risk-return basis, the fund shows a strong alpha of 11.16 (category average: 3.90), reflecting significant outperformance against the benchmark. However, its Sharpe ratio of 1.70 (category average: 3.53) indicates lower riskadjusted returns. This suggests the fund delivers high returns, albeit with higher volatility. HDFC Balanced Advantage Fund stands out for its consistent performance and adaptable strategy. While it carries higher volatility, its potential for superior returns makes it a suitable choice for investors with a moderate risk appetite and a minimum investment horizon of three years.

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]