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- ICICI Prudential Balanced Advantage Fund
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ICICI Prudential Balanced Advantage Fund is an equity-oriented hybrid fund. By virtue of its functionality, hybrid funds invest in a combination of equity and debt.
These types of funds are chosen for those who do not want to go for portfolio balancing at regular intervals. These funds are great if you do not want to risk the principal amount, protect the downside and yet make market-friendly returns.
In fact, the data of last ten years have shown that balanced funds have given better returns than large-cap funds (on an average, 9.75 percent for balanced funds, while it is 8.46 percent for large caps). Let us find out about ICICI Pru Balanced Advantage Fund, and check if it is a fund worth investing in.
Basic Information and Costs
The fund was launched on December 30, 2006. The benchmark for ICICI Pru Balanced Advantage Fund is Crisil Balanced Fund Aggressive. The riskometer deems this fund on a ‘moderately high’ risk grade. The minimum investment needed for this fund is Rs.5000. If you take the SIP route, you have to invest minimum Rs.1000 with 5 postdated checks of minimum Rs. 1000.
Tunds have different fund managers. The ones who work on the equity aspect of for ICICI Pru Balanced Advantage Fund are Manish Gunwani and Ashwin Jain. The one who helms the debt component is Manish Banthia
As on August 31, 2016, the asset size is Rs.14, 180 crore. The expense ratio is 2.26 percent. There is an exit load of 1 percent if you redeem the fund before 540 days.
As on present, 57.8 percent is allocated to equity, with 34 percent in debt and 8.3 percent in cash. The top 5 equity sectors, the fund invests in are financial (14.70 percent), energy (9.67 percent), healthcare (8.53 percent), technology (5.88 percent) and FMCG (5.33 percent).
The top 5 equity holdings are HDFC Bank (5.68 percent), ICICI Bank (2.63 percent), Maruti Suzuki India (2.36 percent), Reliance Industries (2.26 percent) and Cipla (2.15 percent). The top 5 debt holdings are Bajaj Finance 2016 (commercial paper), 7.59% GOI 2026 (GOI Securities), 7.9% HDFC 2026 (Bonds or Debentures), 7.68% GOI 2023 (GOI Securities), 8.38% HDFC 2018 (Bonds or Debentures) and 7.59% GOI 2029 (GOI Securities).
Since its launch, ICICI Prudential Balanced Advantage Fund has given 11.61 percent returns per annum. It has given 13.75 percent, 18.64 percent and 16.31 percent per annum in a 1, 3 and 5-year period respectively. Though it beat category average in the 1 and 5-year period, it trailed behind the category average in the 3-year period which gave 19.82 percent returns per annum.
ICICI Prudential Balanced Advantage Fund is one of the best defensive funds available in the market today. When the market moves up, the fund sells off equity and moves into debt, and vice-versa. It swings between 30 and 80 percent equity exposure, depending on market levels. There is compulsory booking of profit when the market goes up and buying more units when the market down, all done automatically by the fund according to specialized algorithms.
There are other balanced funds like HDFC Balanced Fund and L&T India Prudence Fund, which have given better returns but ICICI Prudential Balanced Advantage Fund is a product that is geared to protect the downside. It is a low volatile product with a dynamic asset allocation strategy.
The rebalancing is done every day; the fund makes use of derivatives to protect against downside or create arbitrage returns. The way the fund is managed, it is unlikely to experience fall in NAV as much as its peers may in a prolonged bear market.
The track record shows that the fund does a neat job of cushioning losses in falling markets and gives decent returns, when the market is doing well. While investing in equity, the fund follows the Price to Book ratio, which means it increases equity exposure when valuations are low, and dramatically reduces it when valuations are high. The equity component is more in favor of large-cap stocks.
Should I buy, sell or hold ICICI Prudential Balanced Advantage Fund?
By all means, you should invest in this fund, if you are looking for a defensive product which gives double-digit returns.
Excellent Fund Size
Excellent Fund House
Good Fund Manager
High Expense Ratio