ICICI Prudential cuts fund’s equity allocation to 20-month low

economictimes.indiatimes.com:

Balanced Advantage fund, the second-largest dynamic asset allocation scheme with assets under management of ₹60,000 crore, reduced its equity allocation to 31.2% in July, the lowest in the past 20 months, amid increasing equity valuation.

«The fund is run in a countercyclical manner, paring down equity when markets rise and increasing it when markets fall. In line with the model and the prevailing high equity market valuations, the net equity levels of the fund have been reduced,» said Sankaran Naren, CEO, ICICI Prudential Mutual Fund.
Balanced advantage funds invest in a mix of debt and equity, based on market valuations. Such schemes lower allocation to equities when market valuations appear expensive and vice versa. The net equity component in the scheme can vary between 30% and 80%, with the balance being invested in a mix of arbitrage and debt, with total equity allocation above 65%, thereby giving it equity taxation. Fund managers decide equity valuations based on the trailing price-to-earnings (PE) ratio of Nifty 50 or S&P BSE 100 and use other ratios like price-to-book and dividend yield to decide equity allocation.

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The scheme had an equity allocation of 41.4% in March, which was brought down to 37.4% in June.
The lowest equity allocation in ICICI Prudential Balanced Advantage Fund's history since its launch in March 2010 was 30.13% in August 2018.

ICICI Pru Cuts Fund’s Equity Allocation

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