Balanced advantage funds promise equity growth without full equity risk, but do they really deliver on principal safety?
Balanced Advantage Funds (BAFs) are marketed as the “safe middle ground” — equity-like growth without full equity risk. The pitch sounds reassuring. But when you look closer, the promise of principal protection falls apart.
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Balanced Advantage Funds expose investors to significant equity risk, whereas FactorCapro’s glide path strategy safeguards principal without sacrificing growth potential.
Feature | Balanced Advantage Funds | Factor Capro |
|---|---|---|
Typical Equity Exposure | 65% minimum, often 80-85% | Starts with 100% debt, gradually moves to 50% multi-asset |
Market Downturn Impact | Can drop 50%+ (e.g., 2008 crisis) | Principal protected, minimal loss |
Tax Efficiency | Requires maintaining 65% for LTCG | Efficient via capital gains tax |
Principal Safety | Not guaranteed | Principal never below initial |
Risk Profile | Moderate to high | Low to moderate, risk-managed |
