The past two years have been a test. Markets climbed to record highs in late 2024, then fell sharply through early 2026—the Nifty 500 Total Return Index (TRI) losing over 20% from peak to trough—before partly recovering ground. For investors in balanced advantage funds (BAFs), navigating that entire episode was to happen almost automatically. When markets got expensive, the fund would pull back equity. When they fell and became cheap again, the fund would step in and buy. You wouldn’t have to do anything. That’s the pitch.

BAFs or dynamic asset allocation funds (DAAFs) are built to shift between equity and debt as conditions change—dialling up exposure when markets become attractive, pulling it back when valuations stretch. The…