Fund Radar: Getting away from the madding market

The Indian market is bubbling over with excitement, and almost every company and investor is dancing their way to the bank. Yet, there's a category of funds that has started taking a more measured approach: BAFs (balanced advantage funds). These hybrid funds are designed to adjust their asset allocation as per market conditions, offering protection from significant downturns. The most recent examples of their resilience could be seen in June and July. On the day of the Lok Sabha election result in June, the broader equity market (Nifty 500) tripped 6.8 per cent against BAFs' just 3.8 per cent. Similarly, in July, the market went off the boil due to the Japan Yen carry trade incident, falling more than double that of the average BAF. So, why did the BAFs fall less? Broadly speaking, they use two strategies to pull the handbrakes during a falling market: asset rebalancing and hedging. Asset rebalancing BAFs adjust their