Top 10 balanced advantage funds: Are they dynamic or passive?

Balanced advantage funds (BAFs), also known as dynamic asset allocation funds , have grown more than threefold (in terms of assets managed) in the last five years, mainly because these funds can, in theory, skilfully navigate the volatility of a market. How? BAFs can adjust their equity exposure based on market conditions. In times of uncertainty, they can play it safe by cutting back on equity to manage risk. Conversely, when the market outlook brightens, they can ramp up their equity allocation to seize growth opportunities. Ultimately, it largely boils down to how the fund manager of these schemes views the market. If they are optimistic about the market's short- to mid-term potential, they may invest a larger percentage of investor money in equity; if they are lukewarm, they may choose to completely withdraw, maintaining zero equity exposure if deemed necessary. Given that BAFs enjoy a lot of freedom, we wanted to check which BAFs have exhibited the most frequent shifts in equity exposure over the past five years. The dynamic and steady BAFs To identify which funds are more dynamic and which are steadier, we analysed the equity exposure of the 10 most popular BAFs (by AUM) over a five-year period, ranking them by standard deviation. Baroda BNP Paribas and Aditya Birla Sun Life BAFs were the most dynamic. Their equity allocation ranged from around 40 per cent to nearly 90 per cent during this time. On the other end of the spectrum, Tata Balanced Advantage Fund and NJ BAF (launched just three years ago) have maintained relatively stable equity portfolios. When examining the SIP returns of the dynamic and steady BAFs, it becomes clear that the results are mixed. There is no outright winner, though it's important to note that other factors can influence a BAF's performance. Exploring the 'dynamic' and 'stable' BAFs Top 10 BAFs by AUM ranked from lowest to highest standard deviation  Fund  AUM (cr) Standard Deviation Minimum equity exposure (%) Maximum equity exposure (%) Median equity exposure (%) 5-year SIP Return (%)* Tata Balanced Advantage Fund  10,453 4.63