The Mutual Fund Show: Is It Time To Invest In Balanced Advantage Funds?

The broader markets plunged on Wednesday, underperforming the benchmark indices, eroding investor wealth significantly amid a sell-off. But fund managers said the recent decline in small-cap and mid-cap markets is no reason for worry as long as investors focus on the long term.

Nisreen Mamaji, CFP, Founder, MoneyWorks FS, echoed Soni. She said that for longer term investors who have a certain goal in mind, it's better to stay invested and let the fund manager perform asset allocation in multi-cap and flexi-cap funds.

"Consider opting for arbitrage funds for short-term investments instead of traditional fixed income options, Mamaji said, adding that for 1-3 year horizon, balanced advantage funds, with equity, arbitrage, and bonds, could be suitable. "Check asset allocation before investing."

Referring to the market regulator's recent directive to fund managers, asking them to proactively protect investor interest, Suresh Sadagopan, MD and principal officer of Ladder7 Wealth Planners, said: "I really feel that the froth has been building up for some time, which SEBI has correctly flagged now."

The timing of withdrawing money, according to Sadagopan, remains uncertain. However, if the asset allocation strategy is currently unbalanced, one could contemplate rebalancing and reallocating funds into the suitable categories, he said.

Balanced advantage funds suit those seeking low-risk investments, professional management, and dynamic market-based positioning for their portfolios, Sadagopan said.