Long-term investors! You could consider adding BAFs to your portfolio

21 Apr 2022

Investors typically choose equities because its returns generally out-pace that of other asset classes over the long term.

And while they are aware that the prospects of these returns come with additional risk vis-à-vis other asset classes, negative or mediocre returns tend to unnerve even seasoned investors or those who have been exposed to equities for a long time.

These investors have probably seen multiple ups and downs in their course of being long-term investors, and yet, extreme movement in prices can sometimes be unsettling.

What can you do?

Say, for instance, your investment horizon is at least five years, but the constant volatility in equities is making you wonder whether you should move some of your investments to fixed income to keep the capital safe.

Is this reshuffle in the portfolio merited, or is it best to just leave things untouched?

Here’s where Balanced Advantage Funds can come to your rescue.

They are structured in a manner where they can dynamically reallocate funds between equity and debt based on market conditions. These funds move between the two asset classes in a way that there could be a balance between the risk and the reward.

Apart from your portfolio automatically being rebalanced, investors could also benefit from efficiency in tax treatment.

When investors manually move their money between equity and debt, they could be subjected to taxes on the capital gains made in the short term.

Balanced Advantage Funds, however, are structured in a manner where, when the fund moves between two asset classes as a part of its routine rebalancing, it is not liable for taxes. Only when an investor is selling the final sales proceeds are taxable in the hands of the investors.

Tax treatment of the fund also, generally, continues to remain equity-oriented, which is ultimately beneficial for investors.

These qualities make it a fund where you can literally invest and forget! So you can consider and Go Automatic with Balanced Advantage Funds!

 


An Investor Education and Awareness Initiative by Kotak Mahindra Mutual Fund.
Visit https://www.kotakmf.com/factsheet/investor-info to know more about the process to complete a one-time Know Your Customer (KYC) requirement to invest in Mutual Funds, procedure w.r.t. change of address, phone number, bank account details, etc. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website (www.sebi.gov.in/intermediaries.html). For any queries, complaints and grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officer. Additionally, investors may also lodge complaints on https://scores.gov.in if they are unsatisfied with the resolution given by AMCs. SCORES portal facilitates you to lodge your complaint online with SEBI and subsequently view its status.

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© Kotak Mutual Fund.2022
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
© Kotak Mutual Fund.2022
Mutual fund investments are subject to market risks, read all scheme related documents carefully.