Union Balanced Advantage Fund Review



Union Balanced Advantage Fund


Dynamic Asset Allocation (Balanced)

AUM (Rs Cr)

900 cr (As on 30/04/2021)

Fund Manager

Mr Hardick Bora

Mr Parijat Agrawal

Mr Vinay Paharia


S&P BSE Sensex 50 TRI (65)

Crisil Composite Bond TRI (35)



What is Union Balanced Advantage Fund?

Union balanced advantage fund is a dynamic asset allocation or balanced advantage fund.

It invests in both equity and debt but in varying and flexible numbers.

It follows an in house model called Union Market Pulse Indicator (UMPI).

The UMPI model analyses the historical relationship between Nifty’s Price to its Fair Value and thereby suggests the fair allocation to equity at any given time.

It can move anywhere between 30-80% in equity.

For tax calculation purposes, it is considered an equity fund.


Union Mutual Fund

What is a balanced fund? 

A dynamic asset allocation fund is more popularly known as a balanced advantage fund.

A balanced advantage fund is a type of hybrid fund.

It invests in debt, equity and arbitrage positions although the allocation is not fixed and can also sit on cash if the fund manager desires so.

Unlike other hybrid funds like multi asset, aggressive and conservative, a dynamic asset allocation or a balanced advantage fund does not have a fixed mandate to follow.

The fund manager can move across different asset classes based on the prevailing market conditions.

The importance of a balanced advantage fund is felt more during a bearish market phase since it can cut down its equity portion and at the same time make periodic equity purchases in the dip.

This is unlike other pure equity funds who at all times have to maintain their mandate irrespective of the market situation.

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Union Balanced Advantage fund portfolio 

As on 30th April 2021, the fund was not overweight on any sector.

It had pruned its equity exposure to a bare minimum of 30%.

For August 2020 end its equity exposure was at the maximum possibility of 80%.

Union Balanced Advantage fund is a classic balanced advantage fund with a very simplistic approach.

It cuts down on equity exposure when it feels the market is trading at a premium and increases equity exposure when the market feels undervalued

As on 30th April 2021 it was underweight on the following sectors:

  1. Chemicals
  2. Financials
  3. FMCG &
  4. Healthcare by a large margin.

The fund has always been an actively managed and well diversified fund which can be attested by the fact that as on 30th April 2021, it held 89 stocks.

This is true for most balanced advantage funds though since they tend to be more diversified with both, sectors and stocks.

Its allocation to the various asset classes as on 30th April 2021 is as under:

  1. Equity – 29.10% 
  2. Debt – 20.00%
  3. Cash - 50.90 %

Unlike certain other balanced advantage funds, this fund usually refrains from a cyclical/value pick with respect to a particular sector which should not be very surprising considering the system it has in place

This approach helps with better downside protection but can miss out on attractive opportunities meaning it has both its pros as well as cons.

It had no exposure at all to mid or small cap stocks and 100% equity exposure was towards large cap stocks.

This is keeping in line with the classic approach mentioned earlier, there is no cyclical or mid or small adventure to generate alpha when the fund believes the market is over priced.



Union Mutual Fund


Union Balanced Advantage Fund Nav History

Union Balanced Advantage Fund is not exactly a seasoned fund since it was only launched in 2017.

Despite being young in years, the fund has exceeded expectations and surpassed giants in the balanced advantage fund category.

Major credit for this can be attributed to the simplistic approach adopted by the fund on the back of their UMPI model

Each balanced advantage fund will operate in a way which could be very different from the rest and therefore it makes no sense to compare one fund to another.

Union balanced advantage fund has historically done better during a bearish market phase which has helped the fund sit on handsome returns even when it has cut down its equity exposure during a bullish phase.

All of this can be better understood by tracking the historical movement of Union Balanced Advantage Fund’s NAV

As the fund has a very simple approach, the same can be witnessed in its debt quality too.

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Taxation on Union Balanced Advantage Fund

For the purpose of taxation, Union Balanced advantage fund qualifies as an equity fund and the taxation charges applicable on it are as follows:


Long term capital gains tax better known as LTCG is applied on any equity mutual fund when the gains from an equity mutual fund which is held for more than a year is more than 1 lakh.

The LTCG rate is 10%.

Capital gains up to 1 lakh are exempt for taxes.

There is no indexation benefit when calculating LTCG.



Short term capital gains tax better known as STCG is applied on gains from an equity mutual fund which is held for 12 months or less.

The STCG rate is 15%.

There is no ceiling benefit in STCG like the 1 lakh ceiling in LTCG.

STCG is charged on from Re 1.


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What is the difference between Balanced Fund and Balanced Advantage Fund?

Balanced funds and balanced advantage funds are both types of hybrid mutual funds.

Balanced funds are aggressive hybrid funds that can invest in equities anywhere between 65-80% at all times.

As a category, aggressive hybrid funds were previously more popularly referred to as balanced funds since they were perceived as the right fit to receive monthly dividends (which was not true).

A balanced advantage fund on the other hand usually swings anywhere between 30-80% depending on the prevailing market conditions.

Most mutual fund houses have an in house model to run their balanced advantage funds.

Balanced advantage funds usually shed their equity exposure when the market is on the rise and vice versa but a balanced fund will need to be invested in equity a minimum 65% at all times irrespective of the market situation.

All balanced funds are treated as equity funds for taxation purposes but taxation for balanced advantage funds varies from one fund to another. 

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         Unlike equity funds, a balanced advantage fund has less restrictions and more flexibility meaning every fund manager will manage it in a manner that she feels fit.


         With a balanced advantage fund, how it does in a bull market is of less importance compared to how it performs in a bear market and that is how its nav should also be judged.

       If high returns is all you focus on then a balanced advantage fund should not take your time and money.


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Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing

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