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Safe-bet BAFs take the back seat as investors turn to riskier funds

Outflow not huge but the traction seen in the later part of 2021 is waning, shows data

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4 min read Last Updated : May 24 2023 | 1:04 PM IST

Balanced advantage funds (BAFs) were popular in the later part of 2021 and continued to see good inflows until some months back as investors looked for safer options amid over-valuation concerns. As such concerns ease, investors are turning to riskier funds and shifting from BAFs. Redemptions from the hybrid fund category have exceeded in six of the last seven months, with investors pulling out a net of Rs 3,140 crore during the seven-month period.

Monthly inflows into the riskiest mutual fund (MF) products—small-caps and thematic funds—have surged. The two fund categories have consistently beaten others in terms of monthly net inflows since October 2022. Between October and April, small-cap and sectoral funds have drawn a net investment of over Rs 12,000 crore each. At the same time, flexicap and large-cap funds received net investments of Rs 3,900 crore and Rs 1,100 crore.

"Majorly, it's behaviour driven. You will notice