Over the five years to September 2026, the five largest balanced advantage funds returned 8.43% (Tata) to 13.62% (HDFC) a year, but their 2020 falls ranged from 16.2% (Edelweiss) to 33.3% (HDFC), against 38.4% for the Nifty 50. A BAF does not guarantee shallow falls. A balanced advantage fund (BAF), also called a dynamic asset allocation fund, moves money between shares and bonds according to a model, usually holding less equity when markets look expensive and more when they look cheap. This guide compares five of the largest with data to September 2026, and checks how well they actually held up in the 2020 crash.
What SEBI Requires
SEBI's circular of 26 February 2026 says only that equity and debt are "managed dynamically". There is no fixed equity range for the category; the ranges you may have seen (such as 30–80%) are individual fund houses' models, not a rule. Since 2026, these funds may hold only equity and debt instruments, so no gold or silver.
How the Model Works
Each fund house uses its own model, typically built on measures such as price-to-earnings or price-to-book ratios, or the gap between earnings yield and bond yields. When the model signals that shares are expensive, the fund cuts its net (unhedged) equity; when they look cheap, it adds.
Many BAFs hold shares and sell futures against part of them. This keeps gross equity, including the hedged part, at 65% or more, so the fund is taxed as an equity fund, while the net equity that actually moves with the market can be much lower.
Five Balanced Advantage Funds Compared
| Fund | 3 years (a year) | 5 years (a year) | Total expense ratio | Base expense ratio | AUM (₹ Cr) | Fund managers |
|---|---|---|---|---|---|---|
| HDFC Balanced Advantage Fund | 10.41% | 13.62% | 0.78% | 0.64% | 1,07,296 | Anil Bamboli, Gopal Agrawal, Arun Agarwal and 3 others |
| ICICI Prudential Balanced Advantage Fund | 10.54% | 10.24% | 1.04% | 0.71% | 75,399 | Rajat Chandak, Manish Banthia and 3 others |
| Edelweiss Balanced Advantage Fund | 10.11% | 8.99% | 0.81% | 0.53% | 13,445 | Bhavesh Jain, Bharat Lahoti and 2 others |
| Kotak Balanced Advantage Fund | 9.03% | 8.61% | 0.83% | 0.54% | 17,373 | Abhishek Bisen, Hiten Shah, Rohit Tandon |
| Tata Balanced Advantage Fund | 7.63% | 8.43% | 0.70% | 0.49% | 8,539 | Rahul Singh, Sailesh Jain and 2 others |
Direct plan, Growth option, sorted by 5-year return. Returns are annualised, calculated from AMFI NAVs to 28 September 2026. AUM as of 31 August 2026. Expense ratios as of 22–28 September 2026; fund managers as listed in September 2026. Since 1 April 2026, funds disclose a base expense ratio (the fund house's own charges) and a total expense ratio that adds brokerage and statutory levies; both are shown.
For comparison, Nippon India Balanced Advantage Fund returned 10.07% a year over three years and 9.34% over five, with a total expense ratio of 0.89% (base 0.56%) and AUM of ₹9,918 crore.
What the Numbers Tell You
Three-year returns are close together
Over three years, all five returned between 7.6% and 10.5% a year. The five-year gap is wider, from 8.43% (Tata) to 13.62% (HDFC).
HDFC: the largest, and the most equity-heavy in a crash
At ₹1.07 lakh crore, HDFC Balanced Advantage Fund is much larger than the others. It has the highest five-year return (13.62%) but also fell the most in 2020, by 33.3%, almost as much as the Nifty 50. In that crash it behaved more like an equity fund than a cushioned one.
Edelweiss: the smallest fall in 2020
Edelweiss's fund fell 16.2% in the 2020 crash, the least of the five. Its five-year return, 8.99%, is in the middle of the group.
Costs
Tata has the lowest total expense ratio (0.70%) and ICICI Prudential the highest (1.04%). On the base expense ratio, all five are between 0.49% and 0.71%.
The 2020 Crash Test
The whole point of a BAF is to fall less than the market. Here is how far each fell from its early-2020 peak to its March 2020 low:
| Fund | Fall, Feb–Mar 2020 | ₹10 lakh became |
|---|---|---|
| Nifty 50 (UTI Nifty 50 Index Fund) | −38.4% | ₹6.16 lakh |
| HDFC Balanced Advantage Fund | −33.3% | ₹6.67 lakh |
| ICICI Prudential Balanced Advantage Fund | −27.0% | ₹7.30 lakh |
| Kotak Balanced Advantage Fund | −26.3% | ₹7.37 lakh |
| Tata Balanced Advantage Fund | −20.0% | ₹8.00 lakh |
| Edelweiss Balanced Advantage Fund | −16.2% | ₹8.38 lakh |
Peak-to-trough fall in Direct plan NAV: highest NAV from 1 January to 21 February 2020 against lowest NAV from 1 March to 3 April 2020.
All five fell less than the index, but the range is wide: from 16% to 33%. A BAF is not a guarantee of shallow falls. Check the fund's own record rather than assuming the category protects you.
How BAFs Are Taxed
For units sold from 1 April 2025:
- Gross equity of 65% or more (including hedged positions), as most BAFs maintain: taxed as an equity fund. Gains within 12 months at 20%; after 12 months, 12.5% on gains above ₹1.25 lakh a year.
- Equity below 65%, but no more than 65% in debt: 12.5% on gains after 24 months, with no exemption; slab rate within 24 months.
- More than 65% in debt: slab rate, whatever the holding period.
Check the fund's factsheet for its gross equity level. More in our guide to mutual fund tax in 2026.
How to Compare Balanced Advantage Funds
- Read how the model works. The fund's factsheet or scheme information document explains what drives its equity level.
- Look at falls as well as returns. A BAF that falls nearly as much as the index is behaving like an equity fund.
- Compare costs like-for-like. Base with base, total with total. BAFs use derivatives, so levies add to the total.
- Choose the Direct plan. See direct vs regular plans.
- Think about lump sums carefully. A BAF's model adjusts equity for you, which makes a lump sum less of a timing bet than in a pure equity fund, but as 2020 showed, it can still fall sharply soon after you invest.
BAF vs Aggressive Hybrid Fund
- Balanced advantage: the equity level changes with the fund's model. SEBI sets no range.
- Aggressive hybrid: 65–80% in equity at all times, whatever the market.
If you want the equity level adjusted for you, a BAF does that. If you want a steady mix, an aggressive hybrid keeps one; see our guide to hybrid mutual funds. How much of your portfolio belongs in either depends on your goals and time horizon; our financial planner can help you set an allocation.
This guide explains how to compare these funds. It is not a recommendation to buy any specific fund.
Related fund guides
Run your numbers: many people use a BAF as the fund they withdraw from in retirement; the SWP calculator shows how long a corpus lasts at your monthly withdrawal. If you're investing a lump sum instead, the lumpsum calculator shows what it could grow to, though as the 2020 table shows, it can fall sharply first.
