SBI Balanced Advantage Fund, which is an open-ended dynamic asset allocation fund managed by SBI Mutual Fund, has successfully completed three years of existence in the market. Introduced in August 2021, the SBI Balanced Advantage Fund witnessed record-breaking collections of over Rs. 14,600 crores during its New Fund Offer.
The investment objective of the scheme is to provide long- term capital appreciation and income from a dynamic mix of equity and debt investments. Over the course of its journey since inception (August 31, 2021), the scheme has delivered a commendable return of 14.11%, outperforming its benchmark indices such as the NIFTY 50 Hybrid Composite Debt 50:50 Index (10.58%) and BSE Sensex (14.15%). For instance, a lumpsum investment of Rs. 1 lakh in the fund’s launch would have grown to Rs. 1.48 lakh by August 31, 2024.
Balanced Advantage Funds like SBI’s operate by investing in a combination of equities and fixed deposit-like instruments. These funds adjust their asset allocation dynamically in response to market conditions, aimed at generating optimal returns while managing risk effectively. Known also as Dynamic Asset Allocation Funds, Balance Advantage Funds offer investors the benefits of flexibility and diversification.
As of August 31, 2024, the Scheme has an exposure 30.37% to equity with the balance invested in debt.
Over the past 1 year, the scheme has delivered CAGR returns of 24.17% vis-à-vis 19.98% by the scheme’s benchmark (NIFTY 50 Hybrid Composite Debt 50:50 Index).
The AUM of the scheme was Rs. 32,440.95 crores as on August 31, 2024, with over 5.97 lakh folios. The fund managers of the scheme are Dinesh Balachandran, Head of Equity, overseeing the equity investments, Rajeev Radhakrishnan, CIO – Fixed Incomeand Mansi Sajeja serving as the co-fund managers for debt(since November 2023) along with Pradeep Kesavan who manages overseas investments.
The fund’s equity allocation is mainly focused on sectors such as Energy, Financial, Construction, Automobile, and Technology. It maintains a lower exposure to the Energy and Financial sectors compared to its peers in the same category.
As for the debt component, it is noteworthy that the fund holds securities with a lower credit quality, indicating that the borrowers it has extended credit to may not have the strongest credit profiles.
The fund’s top five holdings include Government of India securities, HDFC Bank Ltd., ICICI Bank Ltd., GAIL (India) Ltd., and Bharti Airtel Ltd.
Other highlights
Minimum Investment Amount for Systematic Investment Plan (SIP): The minimum investment amount for monthly SIP is Rs 1,000 and in multiples of Re 1 thereafter for a minimum of six months.
Alternatively, investors can choose a minimum investment amount of Rs 500 and invest in multiples of Re 1 thereafter for a minimum of one year.
Minimum Investment Amount for Lumpsum Investment: The minimum investment amount for lumpsum investment is Rs 5,000 and in multiples of Re 1.
Suitability of the Scheme: This scheme is ideal for investors who are looking for long-term capital appreciation.
It offers dynamic asset allocation between equity, equity-related instruments (including derivatives), and fixed income instruments.