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 29th Oct 2021 indicates a value of 26.7 and equity band for the month of November will continue to be 30-40%.

      OUTLOOK

Three key drivers of Equity markets are 1) Earnings 2) Interest Rates and 3) Valuations.

Earnings - For the first time since the 2008 GFC, India has seen 4 consecutive quarters where BSE200 2-year Forward EPS has been upgraded. Sustained momentum in earnings resulting in a cycle of earnings upgrades can help drives markets higher.

Interest Rates - Interest Rates, both in India and globally are trending upwards on account of higher inflation and faster than expected economic recovery. Higher interest rates are generally negative for Valuations.

Valuation - Indian markets have significantly outperformed global markets since the pandemic bottom. The scope for valuation rerating driven market move is limited.

     FUND FEATURES: (Data as on 31st October'21)

Category: Dynamic Asset Allocation or Balanced Advantage
Monthly Avg AUM: Rs2,698.73 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): 13.48%
Modified Duration:1.63 years*
Average Maturity:1.89 years*
Macaulay Duration:1.68 years*
Yield to Maturity: 4.44%*
*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): 65.46%
Debt: 34.54%
Net Equity: 37.15%
Market Cap Split:
Large Cap: 71.48%
Mid and Small Cap: 28.52%
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

(31 October 2021)

     SECTOR ALLOCATION

     RISKOMETER

Scheme risk-o-meter

Benchmark risk-o-meter