Radhika Gupta of Edelweiss Mutual Fund wants you to invest in these 'Khichdi' funds; know why

Balanced Advantage Funds (BAFs) are fast gaining traction among Indian investors who want a blend of growth and stability. Radhika Gupta, CEO & MD of Edelweiss Mutual Fund, in a recent episode of The Networth Show, explained Balanced Advantage Funds as India’s version of a “khichdi” – a mix of equities and safer instruments providing tax efficiency and diversified exposure. Typically, 50–60% is in equities and the rest in debt, offering investors a simple yet structured approach to long-term wealth building.

Gupta emphasized that these funds are ideal for investors who want to participate in market growth without constantly monitoring their portfolios.

Balanced Advantage Funds, with their “khichdi” structure, provide a convenient framework to achieve this, giving investors exposure to equities while controlling downside risk. Experts see hybrid funds like BAFs as a bridge between traditional savings instruments and more active equity investing. They democratize access to market growth while keeping volatility in check, making them a compelling choice for new and seasoned investors alike.

“In a market as dynamic as India’s, Balanced Advantage Funds allow investors to manage risk while capturing opportunities,” she said. The built-in flexibility of BAFs to shift between equities and debt ensures that portfolios can adjust automatically to market conditions, making them particularly suitable for those seeking a hands-off yet growth-oriented strategy.

For those looking to simplify their investment journey, Balanced Advantage Funds offer a one-stop solution. Gupta summarised their value perfectly: “They are designed to manage risk for you, so you can focus on your goals rather than daily market fluctuations.” As India’s financial ecosystem continues to expand, BAFs—the “khichdi” of the investment world—are poised to play a key role in shaping the strategies of long-term investors.

The appeal of BAFs extends beyond risk management. Gupta highlighted their tax efficiency, which makes them suitable for long-term wealth creation. By combining equity and debt in a single fund, investors can reduce the need for multiple investments while benefiting from a diversified portfolio. “It’s about creating a plan that grows with your life,” Gupta noted, stressing the importance of aligning investments with personal goals and risk tolerance.

What are Balanced Advantage Funds

Balanced Advantage Funds (BAFs) invest in a mix of equities, debt, and arbitrage opportunities. What makes them unique is that they adjust their equity exposure based on market conditions or proprietary parameters. When stock valuations are high, these funds reduce equity exposure; when valuations are attractive, they increase it. In essence, BAFs actively juggle equity allocation to balance growth potential and risk for investors.

However, it’s important to understand that limiting equity exposure doesn’t make BAFs completely safe. Despite claims by some distributors, no mutual fund investing in stocks can be considered risk-free. Volatility and the possibility of losses remain, so these funds aren’t immune to market swings.

Investing beyond MFs

Despite the growing awareness of mutual funds, India’s household equity penetration remains low at just 7–8%, according to Gupta. This indicates significant untapped potential for structured investment products like BAFs. By offering simplicity and professional management, these funds can encourage more households to participate in the country’s wealth creation story.

Gupta also stressed the importance of consistent investing, particularly for younger investors. Rather than attempting to time the market, she recommends focusing on disciplined contributions and long-term strategies. 

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