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SBI Balanced Advantage Fund Offer Review

SBI Mutual Fund is launching a new hybrid scheme, SBI Balanced Advantage Fund, that follows a dynamic asset allocation investment strategy.

The New Fund Offer (NFO) period for the SBI Balanced Advantage Fund is from August 12th 2021, to August 25th 2021. The scheme re-opens for further subscriptions and redemptions after five days from the date of allotment.

Objective

The fund’s primary objective is to offer long-term capital appreciation through its dynamic asset mix of equity and debt securities. However, the scheme doesn’t guarantee that the primary objective of the fund will be realized.

SBI Balanced Advantage Fund Offer Details

SBI Balanced Advantage FundDetails
NFO Opening DateAugust 12th 2021
NFO Closing DateAugust 25th 2021
Re-open DateAfter five days from the date of allotment
Type of FundOpen-ended equity scheme
Minimum Investment AmountINR 5,000
Minimum Additional Purchase AmountINR 1,000
Exit Load0 -1%
SuitabilityModerately High
BenchmarkCRISIL Hybrid 50+50 – Moderate Index TRI
Plans and OptionsRegular Plan & Direct Plan
Fund ManagerEquity Portion: Mr Gaurav Mehta and Mr Dinesh Balachandran
Debt Portion: Mr Dinesh AhujaOverseas Investment: Mr Mohit Jain
NOTE: 
  • All the investment amounts should be multiple of INR 1/-
  • Minimum SIP/SWP/STP for Quarterly frequency is INR 2,000/-
  • Exit Load – 1% if redeemed before 365 days and 0% if redeemed after.

Who Can Invest?

SBI Balanced Advantage Fund best suits investors who aim to create long-term wealth. The fund spreads its assets dynamically across equity and debt securities, indicating capital appreciation with protection from downside risk. Hence investors with a low understanding of risk can consider investing in this fund. Moreover, investors looking for diversification through dynamic asset allocation can invest in this fund. The fund suits investors with a minimum of 3+ years of investment horizon.

Fund Manager

Gaurav Mehta

Mr Gurav Mehta manages the equity portion of the SBI Balanced Advantage Fund. He joined SBI in 2018 and has more than 15 years of industry experience. Before joining SBI, he worked with Ambit Investment Advisors, Ambit Capital and Edelweiss Capital. Mr Mehta holds a PGDM from IIM Lucknow and is a B.Tech (Chemical Engineering) graduate from IIT Bombay. He also holds the CFA Charter from CFA Institute, USA.

Dinesh Balachandran

Mr Dinesh Balachandran manages the equity portion of the SBI Balanced Advantage Fund. He has over 20 years of industry experience and has been associated with SBI since 2012. Before joining the firm, he was associated with Fidelity, USA. Mr Balachandran holds an M.S. degree from Massachusetts Institute of Technology (MIT) and a B.Tech degree from IIT, Mumbai. He also holds the CFA Charter from CFA Institute, USA. 

Dinesh Ahuja

Mr Dinesh Ahuja manages the debt portion of the SBI Balanced Advantage Fund. He has more than 23 years of industry experience and has been associated with SBI since 2010. His prior assignments were with L&T Asset Management and Reliance Group. Mr Ahuja is a commerce graduate and holds a Finance Master’s degree from Mumbai University.

Mohit Jain

Mr Mohit Jain is responsible for the overseas investments portion of the SBI Balanced Advantage Fund. He has more than nine years of industry experience and joined SBI in 2015. Before joining SBI, he was with CRISIL. Mr Jain is a CFA Charter holder from CFA Institute, USA. 

Asset Allocation

SBI Balanced Advantage Fund dynamically manages the asset allocation between equity, arbitrage, and debt securities based on the market conditions. The fund aims to benefit from the upside potential through its dynamic asset allocation while limiting the downside risk in a volatile market. Following is the indicative asset allocation of the fund.

Types of InstrumentsIndicative Allocation MinimumIndicative Allocation MaximumRisk Profile
Equity and Equity Related Instruments0100%High
Debt and Money Market Instruments0100%Low to Medium
Units issued by REITs and InvITs010%Medium to High

The fund proposes to use a three-tiered investment strategy consisting of asset allocation, strategy tilt and stock selection. The asset allocation will vary between equity and debt based on the market dynamics. The strategy shows how the fund’s assets will be invested, for example, market cap, sector concentration etc. The final tier is stock selection. The equity and debt mix will depend on several factors like equity valuations, fundamental research, interest rate scenario, and the yield curve of different instruments.

Concluding Remarks

SBI Balanced Advantage Fund is an open-ended hybrid fund that offers a dynamic asset allocation edge to its investors. The fund has the flexibility to invest in equity and debt securities dynamically based on market conditions. The fund offers diversification and captures the upside potential of equity while managing the downside risk through debt securities. The fund aims to provide tax efficiency of equity if the asset allocation is inclined towards equity. With the fund’s SWP facility, investors can get regular income.

Investors have to understand that a minimum investment horizon of 3 years is necessary to reap maximum benefits. Also, investors with a low understanding of risk can consider this fund for generating long term wealth. Since the fund doesn’t guarantee returns, experts’ advise to monitor the investment in this fund regularly to see if investors are progressing towards their financial goals.

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