The New fund offer of SBI Balanced Advantage fund that concluded on August 25, 2021 has raked in Rs. 13000 croe. The balanced advantage fund is lucrative in the sense that it sensing when the markets move up and have had a sharp run, some of the funds' are moved to the debt market for the investors' fund safety. Though the differential has been pointed out here, let us know in detail about this SBI mutual fund offer that raked in a massive inflow during the NFO period:
Scheme: An open ended dynamic asset allocation plan
Benchmark- CRISIL Hybrid 50+50 - Moderate Index TRI
NIL - If units purchased or switched in from another scheme of the Fund are redeemed or switched out up to 10% of the units (the limit) purchased or switched on or before 1 year from the date of allotment
1% of the applicable NAV - If units purchased or switched in from another scheme of the Fund are redeemed or switched out in excess of the limit on or before 1 year from the date of allotment
NIL - If units purchased or switched in from another scheme of the Fund are redeemed or switched out after 1 year from the date of allotment
Rs. 5000/- and in multiples of Rs. 1 thereafter
Additional Purchase: Rs. 1000/- and in multiples of Rs. 1 thereafter
Features of the SBI Balanced Advantage fund:
1. Optimal asset allocation: Various parameters are accounted for to determine the accurate mix of assets for fund deployment. The assets are equity, for the purpose of making arbitrage gains as well as in fixed income assets.
2. Lower liquidity: Dynamically managed Debt and Arbitrage portion of the scheme helps in reducing the volatility when the equity market become unfavourable.
3. Complete flexibility: Investors can choose between 0-100% in debt or equity
4. SWP (A) facility: the fund comes with an option that allows withdrawal of some fixed portion of the investment or specified amount to get regular cash flow.
Who should invest in SBI Balanced Advantage Fund?
Risk averse equity investor class with an investment horizon of a minimum of 3 years and chasing capital appreciation and wealth creation need to target such funds. The fund also typically adjusts between equity and debt allocation in view of the market momentum, so those of you who don't want to actively track your investment can take peace by investing in this SBI fund.
Portfolio creation in the fund
Here the fund's portfolio is constructed using these 3 points:
1. Valuations- Here relative valuation are given a higher importance and so equity valuation are compared to debt valuation across markets and time. When equities are seeming to be expensive, more of the funds are channelized into debt and vice-versa.
2. Sentiment: To arrive at a better asset allocation and here the sentiment index is developed which considers several factors such as market internals, positioning etc. These factors provide a sense of where we are positioned in the fear to greed spectrum. When the mood is depressing, more of allocations are made into equity and in the other case when it is devouring, most of it is allocated to debt.
3. Earnings outlook: Earnings outlook is also given a due weightage to arrive at the selection of stocks.
For reducing the volatility and to yield optimal returns through automatic adjustment between equity and debt, the fund aims to provide offer optimal risk-reward ratio. So, risk averse investors who do not have a high penchant for risk can take an exposure into this fund and at the same time can get higher flexibility with their equity or debt allocation.