While retail investors lined up for gold ETFs, smart money (high networth individuals or HNIs) shifted to index funds and hybrid funds in the September quarter, AMFI data shows. HNI’s investment in index funds shot up by 30%, while that in hybrid funds went up by 22%. Balanced Advantage Funds (BAFs) are one of six kinds of hybrid funds. BAFs are equity-oriented, but switch between equity and debt, depending on market valuations. Typically, if valuations are high, BAFs sell equity and switch to arbitrage position and debt. This auto allocation frees investors from the bother of making this switch themselves. No wonder smart investors love BAFs.
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