{"id":484,"date":"2019-06-20T08:50:59","date_gmt":"2019-06-20T08:50:59","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=484"},"modified":"2019-06-20T12:12:37","modified_gmt":"2019-06-20T12:12:37","slug":"will-shriram-balanced-advantage-funds-dynamic-approach-help-you-rid-off-market-volatility","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/06\/20\/will-shriram-balanced-advantage-funds-dynamic-approach-help-you-rid-off-market-volatility\/","title":{"rendered":"Will Shriram Balanced Advantage Fund\u2019s Dynamic Approach Help Investors Get Rid-Off Market Volatility?"},"content":{"rendered":"\n

Equity\nmarkets rallied up after Modi-led-NDA government\u2019s victory happened. On the day\nof election results, Nifty 50 witnessed high volatility<\/a> as the index swung in the range of\n3.7%. It crossed the psychological mark of 12,000 (and on the S&P BSE\nSensex 40,000) but couldn’t sustain those levels.<\/p>\n\n\n\n

And in the debt markets, the ripple effect of downgrading on account of defaulters continued to erode investors’ hard-earned money and make them disappointed. <\/p>\n\n\n\n

Hence there has been a growing need as both the prime asset classes being uncertain, is there a way out for the investors? Few fund houses launched Balanced Advantage Fund<\/a>, an open-ended scheme that is a sub-category of hybrid funds,  which was originally a subset of balanced funds. But, since the re-categorisation of mutual funds<\/a> this was a newly formed category.<\/p>\n\n\n\n

The balanced advantage\/dynamic asset\nallocation fund mitigates the risk by dynamically managing the allocation between equity and debt as\nper the prevailing market valuation and sentiment in each asset class. It aims\nto make optimum use of equity and debt to give the best of both worlds. If need\nbe it captures potential gains by using arbitrage opportunities. <\/p>\n\n\n\n

[Read<\/strong>: Balanced Hybrid Funds: A Solution For Tactical Asset Allocation?<\/a>]<\/p>\n\n\n\n

Thus even Shriram Mutual Fund<\/a>, a Kolkata based mutual fund<\/a> house saw this as an opportunity to attract investors with the launch of Shriram Balanced Advantage Fund(SBAF)- an open-ended hybrid<\/a>– dynamic asset allocation fund.<\/p>\n\n\n\n

As the\nfund house is of the view that this equity and debt allocation adjustment helps\nin avoiding timing the market and eliminates investor emotional biases. <\/p>\n\n\n\n

Besides, SBAF has the flexibility to vary its\nequity exposure between 0%-100%. But under normal circumstances it aims to\nallocate its assets between 65% to 100% in equities, equity related instruments\nand equity derivatives across market cap (including unhedged and hedged\nequity). Plus, it will have exposure to money market\ninstruments, securitized debt & units of debt and liquid category schemes\n& Cash\nto counter the downside risk in equity markets.<\/p>\n\n\n\n

Yet in\nterms of risk-return matrix, this scheme\nis placed at moderate-risk, moderate-return investment proposition as it is\nskewed more towards equity. <\/p>\n\n\n\n

Table\n1: NFO Details<\/em><\/strong><\/p>\n\n\n\n
\n Type<\/strong>\n <\/td>An Open Ended Dynamic Asset Allocation Fund.<\/td>\n Category<\/strong>\n <\/td>Hybrid: Dynamic Asset Allocation<\/td><\/tr>
\n Investment Objective<\/strong>\n <\/td>

To generate capital appreciation with relatively lower volatility over a longer tenure of time. The Scheme will accordingly invest in equities, arbitrage opportunities, derivative strategies and debt and money market instruments.

\n\tHowever, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns.<\/p><\/td>\n<\/tr>

\n Min. Investment<\/strong>\n <\/td>Rs 5,000 and in multiples of Rs 500 thereafter<\/td>\n Face Value<\/strong>\n <\/td>Rs 10 per unit<\/td><\/tr>
\n Plans <\/strong>\n <\/td>\n
    \n\t
  • Regular<\/li>\n\t
  • Direct<\/li> \n\t<\/ul>\n \n <\/td>
\n Options<\/strong>\n <\/td>\n
    \n\t
  • Growth (default option)<\/li>\n\t
  • Dividend<\/li>\n \n
      \n\t
    • Payout<\/li>\n\t\t
    • Re-investment (default)<\/li>\n\t <\/ul>\n\t <\/ul>\n\t\n <\/td><\/tr>
\n Entry Load<\/strong>\n <\/td>\n Nil\n <\/td>\n Exit Load<\/strong>\n <\/td>If redeemed \/ switched-out within 365 days from the date of allotment:
\n
    \n\t
  • Upto 12% of units held by the investor: Nil<\/li>\n\t
  • More than 12% of units held by the investor: 1% of applicable Net Asset Value (NAV)<\/li>\n <\/ul>\n\tIf redeemed\/switched out after 365 days from the date of allotment: Nil\n\t\n <\/td><\/tr>
\n Fund Manager<\/strong>\n <\/td>Mr Kartik Soral<\/td>\n Benchmark Index<\/strong>\n <\/td>CRISIL Hybrid 35+65 – Aggressive Index<\/td><\/tr>
\n Issue Opens<\/strong>\n <\/td>June 14, 2019<\/td>\n Issue Closes:<\/strong>\n <\/td>June 28, 2019<\/td><\/tr><\/tbody><\/table>\n\n\n\n

(Source: Scheme Information Document<\/a>)<\/p>\n\n\n\n

How will the scheme allocate its assets?<\/strong><\/p>\n\n\n\n

Under normal circumstances, it is\nanticipated asset allocation pattern of the SBAF would be as under: <\/p>\n\n\n\n

Table\n2: SBAF’s Asset Allocation<\/em><\/strong><\/p>\n\n\n\n

\n
Instruments<\/strong><\/td>Indicative Allocation<\/strong><\/td>\n Risk Profile<\/strong>\n <\/td><\/tr>
\n Minimum<\/strong>\n <\/td>\n Maximum <\/strong>\n <\/td><\/tr><\/thead>
A. Equity and Equity Related Instruments including Derivatives<\/td>65%<\/td>100%<\/td>\n High\n <\/td><\/tr>
\nB. Debt (including money market instruments, securitized debt & units of debt and liquid category schemes) & Cash\n <\/td>\n 0<\/td>35<\/td>\n Low\n to Medium\n <\/td><\/tr><\/tbody><\/table><\/center>\n\n\n\n

(Source: Scheme Information Document<\/a>)<\/p>\n\n\n\n


\nWhat will be the Investment Strategy?<\/strong><\/p>\n\n\n\n

The investment strategy would be aimed at\nmeeting the investment objective of the Scheme. The equity & debt exposure\nin the portfolio will be dynamically managed in the portfolio to minimize the\nrisk and optimize returns for a long-term investor. The fund manager will\ninvest into opportunities available across the market capitalization.<\/p>\n\n\n\n

The Shriram Balanced Advantage Fund would\ninvest in companies based on various criteria including sound professional\nmanagement, track record, industry scenario, growth prospectus, liquidity of\nthe securities, etc. The Scheme will emphasize on well managed, good quality\ncompanies with above average growth prospects.<\/p>\n\n\n\n

The extent of equity exposure will be\ndependent on the fund manager\u2019s outlook of:<\/p>\n\n\n\n