Commodities typically move in very long cycles. While recent returns may look attractive, commodities are equally capable of entering prolonged downturns that can be painful for investors. Multi Asset Allocation (MAA) funds are required by mandate to maintain a minimum allocation to commodities at all times. That means even when the commodity cycle turns negative, your portfolio stays exposed. Personally, I would rather invest in gold or other commodities separately — and only when they are in a more favorable part of the cycle.
Balanced Advantage Funds (BAFs), on the other hand, offer significantly more flexibility. They are the only category with an unrestricted dynamic allocation between equity, debt, and arbitrage. With the inclusion of REITs now treated as equity for taxation and allocation, their investment universe has grown even further. Except for commodities, BAFs can essentially invest across all major asset classes that MAA funds do — without rigid minimums or forced exposures.
In theory (even if not always perfectly executed by fund houses), BAFs have the rare advantage of being able to shift 0% to 100% into any eligible asset class depending on market valuations and conditions. To the best of my knowledge, no other fund category offers this level of allocation freedom.
In short:
• ✅ No forced commodity exposure during downturns
• ✅ Ability to fully shift between equity, debt, and arbitrage
• ✅ Wider tactical flexibility versus MAA funds
• ✅ Better aligned with dynamic market environments
This flexibility makes Balanced Advantage Funds a more efficient long-term allocation choice — especially for investors who value adaptability in changing cycles.