FUND PHILOSOPHY*

IDFC Balanced Advantage Fund is a hybrid fund with active equity allocation changing based on the trailing P/E of Nifty 50 index. The fund has a pre-defined model which indicates the range of active equity allocation based on P/E levels, and there are 6 different range of equity allocation possible. Higher the P/E band, lower will be the active equity allocation and vice versa.

Change of bands happen once a month while changes within the band happen dynamically on a day to day basis. The active equity portfolio is managed like a diversified fund. Active stock selection philosophy combines quality stocks with good growth potential. The quality filters for the fund are – conversion of EBIDTA to operating cash – OCF as % of EBIDTA > 33%; Moderate leverage: Debt EBIDTA <3x; Profitability: EBIDTA / Net operating Assets >30%. Thus, companies which qualify these parameters and have higher visibility of growth versus peers will form the core portfolio. Depending on P/E levels, the fund can have more large or mid/small cap names. The fund will also use Nifty futures to dynamically manage active equity allocation within a month.

The debt portion of the fund is actively managed. The portfolio emphasizes on maintaining high credit quality and currently has 100% in AAA or equivalent instruments. Further the portfolio is oriented towards short-to-medium duration strategies.

Bloomberg Nifty P/E data as of 30th June 2021 indicates a value of 29.2 and Equity band for the month of July will continue to be 30-40%.

      OUTLOOK

The pandemic's second wave appears to have peaked and a long "plateau" lies in front of us (similar to Jul-Sept 2020). The pace of vaccination will be an important factor to re-start the economic engine – which thankfully was in neutral rather than switched off as the case last year.

For India, macros economic indicators - inflation and crude oil remain the two key variables to track. From a macro point of view, the debate of Cyclical vs Growth will rage till the time RBI policy – which currently focuses entirely on Growth, pivots its focus solely on inflation. It may be difficult to predict how long this phase will last. For smart investors, observing/ keeping track of key macro trends will need to become an integral part of the investment process – domestic as well as global.

Markets at current elevated levels need the support of strong earnings growth and continuation of the loose monetary policy globally, especially in the US. Any perception of change to the worse on both counts will make the markets nervous and twitchy. Market corrections, as a result, will not be slow and suffocating, they will be short and sharp. FY21-23 market move may be more broad-based as compared to the FY17-20 phase. The same may be necessitated across equity portfolios!

     FUND FEATURES: (Data as on 30th June'21)

Category: Dynamic Asset Allocation or Balanced Advantage
Monthly Avg AUM: Rs2,046.42 Crores
Inception Date: 10th October 2014
Fund Manager:
Equity Portion : Mr. Arpit Kapoor and Mr. Sumit Agrawal (w.e.f. 01/03/17)
Debt Portion : Mr. Arvind Subramanian (w.e.f. 09/11/2015)
Standard Deviation (Annualized): 13.80%
Modified Duration:1.19 years*
Average Maturity:1.40 years*
Macaulay Duration:1.22 years*
Yield to Maturity: 4.08%*
*Of Debt Allocation Only
Benchmark: 50% S&P BSE 200 TRI + 50% NIFTY AAA Short Duration Bond Index (w.e.f 11/11/2019)
Asset allocation:
Gross Equity (including Arbitrage): 67.04%
Debt: 32.96%
Net Equity: 37.46%
Market Cap Split:
Large Cap: 72.01%
Mid and Small Cap: 27.99%
Minimum Application Amount: Rs5,000/- and any amount thereafter.
Exit Load: In respect of each purchase of Units:
- For 10% of investment: Nil
- For remaining investment: 1% if redeemed/ switched out within 1 year from the date of allotment (w.e.f. July 5,2017)
SIP Frequency Monthly (Investor may choose any day of the month except 29th, 30th and 31st as the date of instalment.)
Options Available: Growth, IDCW@ (Payout, Reinvestment and Sweep (from Equity Schemes to Debt Schemes only))

PORTFOLIO

(30 June 2021)

     SECTOR ALLOCATION

     RISKOMETER