Investing in UTI Balanced Advantage Fund: Is The Investment Worth?

UTI Balanced Advantage Fund entrance to a crowded market. Find out its potential and decide whether it's the right investment choice for you.

UTI Asset Management Company

UTI Asset Management Company has recently launched the UTI Balanced Advantage Fund (UBAF), drawing the attention of equity investors as the Nifty50 index hits a new high.

  • UTI Balanced Advantage Fund (UBAF): Dynamic allocation for consistent returns.
  • Market Trends: BAFs adapt in crowded markets with diverse equity strategies.
  • Less Volatility, Smart Investing: BAFs offer stability and intelligent investment choices.

UTI Balanced Advantage Fund

The primary objective of UBAF is to achieve long-term capital appreciation and income by managing its portfolio, investing in a mix of equity and debt instruments. The fund's asset allocation decisions are guided by an in-house proprietary model based on fundamentals and valuations. The equity component of the scheme is managed by Sachin Trivedi, while Anurag Mittal oversees the fixed-income investments. 


BAF allocations

UBAF ensures a minimum of 65% allocation to equity, offering favourable tax treatment for investors on long-term capital gains. If the model indicates a lower equity allocation, the fund manager enters the spot-future arbitrage deals to achieve the desired level. This approach helps investors understand how the scheme is positioned and managed during different market conditions.

Market trends

In a market nearing all-time highs, equity allocations of BAFs vary significantly. Some adopt a counter cyclical approach, reducing equity allocations as valuations rise. Others prefer to allocate more to stocks during uptrends. For example, in June 2023, ICICI Prudential Balanced Advantage Fund - reduced its net equity exposure from 52% in March 2023 to 40%. While, the Edelweiss Balanced Advantage Fund increased its allocation to stocks from 55% to 71.50% over the same period. 

Also Read: Gold vs Sensex: A 10-Year Retrospective and Its Impact on Stakeholders, Businesses, and Investors

Performance analysis

As of 30 June 2023, the Association of Mutual Funds in India data reveals that 29 BAFs together manage assets worth Rs 2.04 lakh crore. Over the three years ending July 21, 2023, BAFs, as a category, have returned 13.36%. However, performance varies widely, with the HDFC Balanced Advantage Fund giving 26.44% returns and Motilal Oswal Balanced Advantage Fund offering 8.27% returns over the same period.

Less volatility

BAFs are known for their lower volatility compared to pure equity funds. With a standard deviation of 8%, they provide a balanced investment option for those seeking reduced market fluctuations. However, it is essential to acknowledge that BAFs may still experience losses during market downturns.

Also Read: SIPs Can Help Turn Rs. 10,000 To Rs. 22.66 lacs In 10 Years

Conclusion: Is UBAF the right choice

UBAF can be considered a good investment option, especially for those concerned about market volatility. Its flexible asset allocation strategy allows the fund to adjust to changing market conditions, offering a level of protection during market uncertainty.


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