Rs. 10 lakh invested in a mutual fund scheme on 8thAprill 2013 grew toRs. 1394790 as on 30th June 2015. In addition to the capital appreciation of Rs. 394790 in slightly more than 2 years, the investor also received a handsome dividend of Rs. 163827 during this period. Yes, this superior fund performance of ICICI Prudential Balanced Advantage Fund is a result of using multiple strategies. The scheme has delivered dividend to its investors every month since inception of monthly dividend option under the scheme. Apart from monthly dividend, the scheme also has other frequency payout options. Fund invests in a judicious mix of equities, equity derivatives and debt markets. Unlike the typical balanced fund the allocation between different investment options may change as per changing market conditions. The fund uses derivative hedging strategies in its equity holding thus it is less risky than regular balanced fund especially in down markets.
About the Fund
ICICI Prudential Balanced Advantage fund erstwhile ICICI Pru Equity – Volatility Advantage Plan was launched on December 30 2006 by ICICI Prudential Asset Management Company and currently has an asset size of Rs 6975croresas on June 30, 2015.The net equity allocation of the fund at any point of time remains in the range of 30% -80% while gross equity exposure is always more than 65%. The fund uses derivatives instruments for the purpose of hedging or portfolio rebalancing. The net equity allocation range is well suited for achieving the objectives of the fund. The allocation of equities is determined by a model which is primarily based on Price-to-Book of the equity market. It seeks to hold at least 65 per cent in equities, like most other balanced funds and hence being classified as an equity fund for tax purposes. The equity portion of the fund is jointly managed by Manish Gunwani and Ashwin Jain while the debt portion is managed by Manish Bhatia. The minimum investment in the fund is Rs 5000 with multiples of Rs 1/- thereafter. To discourage early redemption the fund has an exit load on 1% for redemptions within 540 days.
ICICI Prudential Balanced Advantage fund’s current portfolio consists of approximately 66% in equities and 34% in Debt.In equities the top three sectors are Financials, Energy and Technology, contributing 13%, 8% and 6% respectively. Top 10 stocks make up around 26% of the portfolio indicating that the portfolio is well diversified to take advantage of the various segments of market. On the debt front the portfolio consists majorly of government securities and high quality debt papers.
ICICI Prudential balance Advantage fund aims to protect investors from the inherent volatility in equity markets. This is achieved by investing in a careful mix of equities, derivatives and debt market. Equity Derivative is mainly used by the fund to control volatility and downside risk. In short ICICI Prudential Balance Advantage Fund allows you to participate in the equity markets at a controlled risk. The fund is benchmarked against CRISIL balanced fund index.The fund has grown at 17.66% during last one year and at CAGR of 20.38% and 14.66% during last 3 and 5 years respectively. The scheme’s performance is far superior toits benchmark. ICICI Prudential Balanced Advantage fund has standard deviation below the category average indicating that the fund is less risky than its peers. Fund’s alpha of 6.19 indicates that the attractive returns generated by the fund are result of fund manager’s stock selection skills. Funds beta of 0.78 indicates that the fund portfolio is less volatile compared to market. Overall fund has been able to deliver attractive risk adjusted returns consistently.
Should you invest
ICICI Prudential Balanced Advantage Funds aims to protect your capital and build long term wealth. Keeping the fund’s objective in mind the performance especially over the long term has been commendable. The fund invests primarily in large cap stocks and government securities. The returns of this fund should not be compared to pure equity fund as the investment objective is completely different. Considering the quality of the portfolio, less volatility and long term returns of the ICICI Prudential Balanced Advantage Fund it is one of the best funds in dynamic asset allocation category and should be part of every investor’s portfolio.
Review by Mr. Pankaj Mathpal
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