This compares to net outflows of ₹946.56 crore in March.
Fund managers attribute the trend to rising investor preference for Balanced Advantage Funds (BAFs) and other hybrid strategies that offer flexibility amid volatile market conditions.
“In today’s volatile market, with moderating earnings growth, Balanced Advantage and asset allocation funds are better positioned,” said Jaiprakash Toshniwal, Fund Manager – Equity, LIC Mutual Fund Asset Management. “These funds follow the ‘buy low, sell high’ strategy using time-tested models, which has helped them outperform broader indices recently.”
BAFs and other hybrid funds adjust their equity and debt exposure based on valuation and other market indicators. Fund managers say this dynamic approach has helped reduce downside risk and improve investor confidence.
“Every BAF or hybrid fund uses different variables to determine allocation,” Toshniwal said. “But valuation is the primary parameter. Typically, these funds reduce equity exposure as valuations rise and increase it when valuations drop.”
Hybrid funds are also seen as a suitable entry point for first-time or conservative investors. “Volatility often causes psychological fear, leading investors to exit the market prematurely,” he said. “BAFs offer a balanced alternative by mitigating risk while maintaining potential for growth.”
Fund managers note that a growing number of investors are turning to hybrid funds for three key reasons: to gradually enter equities, to seek returns above inflation, and due to the belief that equities have historically delivered better long-term returns.
Commenting on the role of dynamic asset allocation, Harish Krishnan, Co-CIO and Head – Equity, Aditya Birla Sun Life AMC, said, “Asset allocation is about having a disciplined framework to book profits when everything seems to be going well, and to increase allocation when the margin of safety improves.”
He cited the example of the Aditya Birla Sun Life Balanced Advantage Fund, which increased equity exposure from 38% in mid-October 2024 to around 70% by mid-March 2025, during a period of rising pessimism.
“It is this dynamic allocation that helps protect the downside while participating in eventual market recovery,” Krishnan said.
While fund houses use different models to manage these strategies, most rely heavily on valuation metrics. According to industry experts, this method helps avoid sharp drawdowns and supports long-term investing discipline, particularly in unpredictable markets.