Switching between equity and debt: These ULIP BAF funds return up to 12.2% over 10 years

Balanced Advantage funds or those that switch between equity and debt, are popular even in the insurance industry. Offered as part of the Unit Linked Insurance Policy (ULIP) basket, these funds swing from zilch to 100 percent in equity or debt based on market conditions. For instance, when the equity market is bullish, these funds can increase their equity exposure to capture the upside potential. When the equity market is on a downswing, BAFs can reduce their equity exposure to protect the portfolio. Fund managers follow various matrices to decide their asset allocation, like price-to-earnings ratio, price-to-book value ratio, dividend yield, etc. to measure the relative attractiveness of equity and debt at any point in time.

Currently, 10 life insurers offer this DAAF under their ULIP plans, as per Morningstar.in. It is unlikely that all of these ULIP funds are strictly adhering to the dynamic allocation strategy. Here are 5 ULIP DAAFs that rewarded the policyholders with more than 10 percent compounded annualized returns over the last 10 years. Source: Morningstar Investment Research India Private Limited (formerly known as Morningstar Investment Adviser India Private Limited) and factsheet of the respective life insurance companies. Portfolio data as of January 2024.

HDFC Life - Balanced Fund Life Super II
10 year return (CAGR): 12.2%
Fund manager(s): Shailesh Dhamankar

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SBI Life - P/E Managed Fund
10 year return (CAGR): 12%
Fund manager(s): Raghavan MJ

AEGON Life - Balanced Fund
10 year return (CAGR): 11.4%
Fund manager(s): Chirag Hirkane, Lovelesh Manocha and Vishal Advani

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Kotak Mahindra Life - Kotak Pension Balanced Fund II
10 year return (CAGR): 11.3%
Fund manager(s): Hemant Kanawala and Manoj Bharadwaj

ICICI Prudential Life - Dynamic P/E Fund
10 year return (CAGR): 10.2%
Fund manager(s): Manish Kumar

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