Fund of Fortnight

Fund of Fortnight

This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. 

Edelweiss Balanced Advantage Fund - Direct Plan (Growth)

Reason for recommendation
One of the best ways to manage your portfolio and grow is to generate returns during the bull phase of the market and protect those returns during the bear phase. This is achieved by a dynamic investment strategy of balanced advantage funds (BAF). These funds alter their equity allocation between 30 per cent and 80 per cent depending on the valuation of the broader market. When the valuations are high, they reduce their equity allocation and when low, increase it. One of the funds that have been doing this very efficiently is Edelweiss Balanced Advan-tage Fund. It has consistently remained in the top quartile in terms of performance in the last 10 years. In the last three years it has generated return of one and half times its category average. Going forward too it is likely to keep up its perfor-mance. Though its asset allocation is 64 per cent towards equity, 18.5 per cent towards debt and 17.5 per cent towards cash, it will help the fund to protect its gain in the current market volatility. Higher cash will also be in its favour as it will have excess cash to grab opportunities if the market falls. Besides, its portfolio in both equity and debt looks good. In debt, the fund is overweight on government securities and underweight on AAA-rated securities.

Also, most of its debt instruments are of short duration which would again work in its favour as any rise in yield won’t be affecting the return of this fund much. On the equity side, it is large-cap skewed and holds 65 per cent in large-cap stocks compared to the category average of 55 per cent. From the sectoral viewpoint, it is overweight on financial, technology and healthcare. The fund is well-diversified with 99 stocks wherein the top 10 stocks hold 34 per cent of the net asset. The fund is well-suited for a moderate risk-taking investor with investment horizon of more than one year.

 

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