Since December 2023, 14 of the 29 BAFs that Value Research examined have decreased their net equity allocation.
The methods and results of Balanced Advantage Funds (BAFs) in the present trading climate.
Important points:
During recent falls, BAFs have shown resilience in the face of market volatility, declining less than the larger equities market. Their hedging techniques and dynamic asset allocation are to blame for this.
– A large number of BAFs have decreased their equity exposure; some funds have done so by more than 10%. This is because, in comparison to long-term averages, the market is trading at higher valuations overall.
– Ultra-defensive funds such as SBI and DSP have kept their equity allocations low, below 31.5%. Although to a lesser degree, other funds such as Quant and Nippon have also reduced their exposure to equity.
BAFs’ cautious approach is influenced by variables such as inflated market values, a slowing near-term profit trajectory, and a preference for risk avoidance over maximum upside potential.
