Review of ICICI Prudential Balanced Advantage Fund

 

 

Review of ICICI Prudential Balanced Advantage Fund

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ICICI Prudential Balanced Advantage Fund, with an asset size of Rs 16,250 crore, has become the country’s largest equity-oriented mutual fund (MF) scheme.it has gained among the risk-averse. Since its launch in 2006, it has given an annualised return of 11 per cent. In comparison, the benchmark Sensex has given one of seven per cent in this period. In this period, the MF sector’s equity asset base had doubled, while the asset base of balanced funds had risen four-fold. In these past three years, the fund’s annual return was 14.7 per cent. High volatility in the market worked in its favour; it positions itself as a tool to ride such volatility.

The fund has outpaced its benchmark in seven of the past eight years since launch. The track record clearly shows that it manages losses very well in falling markets and manages decent returns in a range-bound market. In runaway bull phases, it tends to underperform more aggressively equity-oriented funds. The dynamic allocation has worked in favour of the fund over three- and five-year time frames and has also taken the asset size to over R10,000 crore. The equity portion is large-cap tilted.

ICICI Prudential Balanced Advantage Fund is an open-ended equity oriented fund that brings multiple benefits to your investments. It strives for growth by investing in equity markets, while providing relative safety through investments in debt instruments.

 

 

 

1 .REVIEW

 

 

The fund aims to generate low volatility returns by investing in a judicious mix of cash equities, equity derivatives and debt markets. The usage of Equity derivatives in this fund is intended to hedge the portfolio against the downside risks, thereby allowing it to generate low volatility returns. This way the fund aims to provide better returns than typical debt instruments and lower volatility in comparison to equity.

A fund designed to deliver a smooth sail to investors rather than bumper returns, comparing this fund’s returns with those of other balanced funds would be an apples-to-oranges comparison. This fund is far more conservatively managed than others in the category. Its low-volatility returns made it climb to four- or five-star ratings since end 2012. It follows the dynamic asset-allocation strategy. Based on the price-to-book-value ratio of the market, the fund sharply reduces equity exposure if valuations are high and raises it if valuations are low. Rebalancing is done on a daily basis. Its equity exposure can range anywhere between 30 and 80 per cent, with debt making up the rest. The fund also uses derivatives to hedge against downside or generate arbitrage returns. Thus, this fund’s NAV is unlikely to fall as much as peers’ in a steep market fall or in an extended bear market.  It’s a unique fund for investors to get to double-digit returns without any nasty bumps along the way.

Although, ICICI Prudential Balanced Advantage has been around for a decade, it has not yet seen a complete bull cycle, such as the one seen between 2004 and 2008. Between end-2013 and mid-2015, when the Sensex saw a good run, its alpha-generation was nominal compared to some other pure-equity schemes.

Details of funds is here under:

 

 

 

 

2. DETAILS OF FUND

 

 

AMC: ICICI Prudential Asset Management Company Limited          

Website: www.icicipruamc.com

Registrar: Computer Age Management Services Ltd. (CAMS)

Website: www.camsonline.com

Fund Category: Equity Oriented

Launch Date: Dec 30 ’2006

Benchmark: Crisil Balanced Fund Aggressive

Assets: ₹ 16252 Crores (as on 31.10.2016)

Plan: Regular & Open Ended

NAV: ₹ 28.22 (G) & ₹ 11.38 (D) (as on 25.11.2016)

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Fund Managers:

Manish Banthia (since Nov 2009)

Education: Mr. Banthia is B.Com, ACA and MBA.

Experience: He joined ICICI Prudential in 2012.

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Manish Gunwani since Jan 2012

Education: Mr. Gunwani is a B.Tech. and PGDM.

Experience: He has over a decade of experience and joined ICICI Prudential in 2012.

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Rajat Chandak since Sep 2015

Education: Mr. Chandak is a B.Com (H) and MBA.

Experience: He has been associated with ICICI Prudential AMC since 2008.

 

 

 

3. INVESTMENT  OBJECTIVE

 

 

The scheme seeks to provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments.

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4. ASSETS ALLOCATION

 

 

  • 60.37% in equity and equity-related securities
  • 33.31% in debt and money market instruments (including investments in securitized debt)
  • 6.32% in Cash & Cash Equivalent

 

 

5. INVESTMENT DETAILS

 

 

Minimum Investments:  ₹ 5,000 Minimum Additional Investments: ₹ 1,000
Minimum SIP amount: ₹ 1000 Minimum No. of SIP: 6 (monthly) or 4(Quarterly)
SIP Top up available. Dates available for SIP: 1st, 7th, 10th, 15th, 20th, 25th, All six dates
Exit Load: For units in excess of 15% of the investment,1% will be charged for redemption within 540 days Entry Load: NIL

 

 

 

6. PORTFOLIO

 

A) Assets Allocations

 

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B) Equity Holding Breakup

 

No. of Stocks: 79 Top 10 Holdings: 26.70%
Portfolio P/B Ratio: 3.07 Portfolio P/e Ratio: 22.41

 

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C) Sectorwise Break-up

 

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7. PERFORMANCE

 

A)Absolute Returns

 

Period ICICI Prudential Balanced Advantage Fund Benchmark Nifty 50 Index
30.09.15-30.09.16 10.85 9.68 8.33
30.09.14-30.09.15 10.22 4.38 -0.20
30.09.13-30.09.14 35.70 28.89 38.87

 

 

B)Compounded Annualized Growth Rate (CAGR) Since Inception 

Period ICICI Prudential Balanced Advantage Fund Benchmark Nifty 50 Index
CAGR Returns (%) 11.41 8.88 8.27
Point to Point (PTP) Returns in INR show the value of ₹ 10,000 invested 28,700 22,932.80 21,710.24

 

 

C)Point to Point Return

Point to Point (PTP) Returns in INR show the value of ₹ 10,000 invested since invested.

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D) SIP Performance

 

A Systematic Investment Plan (SIP), is the most popular & effective method of investing money in mutual funds. By this method one invests a fixed amount of money, automatically at periodic intervals.

The amount of investment can start with as low as Rs 1,000 and one can choose different periods varying from – monthly or Quarterly as available in this scheme. Most popular intervals chosen by 95% of the investors is monthly investing. This is an easy way to Maximize Wealth with small regular contributions, on a long term, which is incidentally our goal. Our Goal us Maximization of your Wealth.

 

 

ICICI Prudential Balanced Advantage Fund 1 Year 3 Year 5 Year 7 Year Since Inception
Total amount invested (₹) 1,20,000 3,60,000 6,00,000 8,40,000 11,80,000
Current Value (₹) 1,30,270 4,40,210 8,87,000 14,11,500 23,72,600
Scheme Returns (%) 16.22 13.51 15.64 14.57 13.63
Benchmark Returns (%) 14.73 9.70 10.94 9.71 9.54
Nifty 50 Index Returns (%) 14.72 8.17 10.84 9.33 9.28

 

 

 

8. DISCLAIMER

 

 

 This article is for information purpose. This has not to be considered as investment advisory. Please contact your financial investment adviser before investment. MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISK. PLEASE READ THE SCHEME RELATED OFFER DOCUMENT BEFORE INVESTING.

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9. CONTACT DETAILS

 

 

Name: WealthMaxi Financial Consultancy Private Limited
Address: Plot No. H-52, Block-H, Main Market, Shakarpur, New Delhi – 110092

Mobile: 9810638155

Telephone: 011-64621378, 011-43027847

Email id: marketing@wealthmaxi.com

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Note: You can read our Review of SBI Magnum Multicap Fund

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Review of ICICI Prudential Balanced Advantage Fund