HDFC Balanced Advantage Fund: A proven winner

HDFC Balanced Advantage Fund had recently crossed Rs 1lakh crores of assets under management (AUM) marking a significant milestone. HDFC Balanced Advantage Fund was formed in June 2018 with the merger of two schemes, HDFC Prudence Fund (one of the oldest hybrid schemes in the mutual fund industry) and HDFC Growth Fund. Balanced advantage funds are hybrid schemes which manage their asset allocation dynamically between equity and fixed income. SEBI has not mandated minimum or maximum asset class wise limits for Balanced Advantage Funds. Over the years, Balanced Advantage Funds category has become the most popular hybrid funds category, overtaking the Aggressive Hybrid Funds category (as per AMFI April 2025 data). In this article, we will review, HDFC Balanced Advantage Fund, one of the best performing balanced advantage funds over the past several years. What differentiates HDFC Balanced Advantage Fund from its peers is its disciplined, model-driven asset allocation strategy that combines valuation metrics, assessment of macro scenarios, and bottom-up stock selection. This investment framework enables dynamic adjustment between equity and debt exposure based, helping to manage risk while aiming for consistent long-term growth.

Superior performance relative to peers across market conditions

The chart below shows the 1 year rolling returns of HDFC Balanced Advantage Fund versus the balanced advantage funds or dynamic asset allocation funds since 1^st January 2020. You can see that the fund was able to outperform the category average across all market conditions.

Source: Advisorkhoj Research. Period: 1.1.2020 to 06.06.2025

The table below shows the 1 year rolling returns distribution of the fund relative to the category average. The percentage of instances (observations) in which the fund gave 15%+ CAGR returns was much higher than the category average.

Source: Advisorkhoj Research. Period: 1.1.2020 to 06.06.2025

Let us now look at the performance of the fund over 3 year investment tenures versus the category average since 1^st January 2020 – see the chart below. You can see that the outperformance increases, and risk / return trade-off becomes even more favourable over longer investment tenures. The superior consistency across longer investment tenures suggests to investors that you should have long investment horizon (minimum 3 years) for this fund.

Source: Advisorkhoj Research. Period: 1.1.2020 to 06.06.2025

Source: Advisorkhoj Research. Period: 1.1.2020 to 06.06.2025

Consistent Top Performer

The chart below shows the quartile rankings of the fund based on calendar year returns over the last 10 years. Even though the fund underperformed, in the initial years after the merger and the mandate change (to align with Balanced Advantage Fund category), the fund has been in top 2 quartiles, including 4 times in the top quartile, for the last 4 consecutive years.

Source: Advisorkhoj Research. Period: 1.1.2020 to 30.05.2025

The chart below shows the quarterly returns of HDFC Balanced Advantage and quartile rankings thereof for the last 12 quarters (ending March 2025). You can see that the fund was in the top 2 quartiles in 10 quarters (9 times in the top quartile) across different market conditions – amazing performance consistency relative to peers. The consistency in outperformance makes this fund a favourite for investors in the balanced advantage, as well as the broad hybrid category.

Source: Advisorkhoj Research. Period: 1.4.2022 to 31.03.2025

Outperformance versus different asset classes

The chart below shows the 3 year rolling returns of HDFC Balanced Advantage Fund versus the Sensex (as a proxy for equity) and Gold (domestic spot price of Gold in MCX) since 1^st January 2020. You can see that the fund consistently outperformed both Sensex and Gold for most of the time. This makes HDFC Balanced Advantage Fund a smart choice for both new and experienced investors looking for long term wealth accumulation with relatively lower downside risks.

Source: Advisorkhoj Research. Period: 1.1.2020 to 30.05.2025

Current asset allocation – Relatively higher equity exposure

The fund (marked in red) has relatively higher net equity (net of arbitrage / hedging) exposure than peers (see the chart below). The outperformance of the fund can be partly attributed to the asset allocation strategy. At the same time, the net equity exposure is not as high as some of peers – prudent asset allocation and risk management.

Source: Advisorkhoj Research, as on 30.04.2025

Limited downside risks

The chart below shows the drawdowns of HDFC Balanced Advantage Fund versus the leading broad market index, Nifty 50 TRI. You can see that the fund was able to limit downside risks for investors in volatile markets.

Source: Advisorkhoj Research. Period: 1.1.2020 to 30.05.2025

Suitable for SWP

Balanced Advantage funds are suitable for SWP because of their lower volatility. SWP generates cash-flows by redeeming units at applicable NAVs. Since equity funds are more volatile, their NAVs are likely to fall more in down markets compared to Balanced Advantage Fund NAVs. To generate the SWP cash flows a greater number of equity fund units have to be redeemed compared to hybrid funds. In long drawn correction, unit depletion in an equity fund SWP can be significant relative to a Balanced Advantage Fund SWP. The chart below shows the results of Rs 30,000 monthly SWP from Rs 50 lakhs investment in HDFC Balanced Advantage Fund since 1^st January 2015. You can see that despite withdrawing Rs 37.5 lakhs over the last 10 years or so, the value of your balance units would have been Rs 92.4 lakhs.

Source: Advisorkhoj Research. Period: 1.1.2015 to 31.05.2025

Who should invest in HDFC Balanced Advantage Fund?

• Investors looking for capital appreciation along with stability over long investment tenures


• The fund is suitable for first time investors or investors who do not have high appetite for volatility


• Investors who are in the last stages of accumulation or transition in the investor life stages.


• Investors who in the distribution life stage (e.g., retirees, soon to retire etc) can also invest in this fund for steady growth and cash-flow generation through SWP


• The fund’s dynamic allocation and risk-management framework make it suitable for investors with moderate risk appetite


• You should have minimum 3 year investment tenure for this fund.

Investors should consult with their financial advisors or mutual fund distributors if HDFC Balanced Advantage Fund is suitable for their investment needs.