Ashutosh Bhargava, Fund Manager and Head of Research, Nippon India Mutual Fund, says “in terms of quality, 80-85% of the fixed income assets are in the investment-grade category and where most of the assets are into government or government-related securities. We are keeping both duration and credit risk low as far as our sustainable strategy is concerned.”
A lot has been said about the balanced advantage fund, a category which is much safer than an aggressive approach in a complete equity-oriented portfolio. Talking about having an exposure in equity as well as in debt, how are fund managers allowed to place themselves in terms of exposure, in terms of ratio in equity and debt in a balanced advantage category?
As the name itself suggests, there is an advantage for a typical balanced fund. In a typical balanced fund, one can remain 65% to 70% invested in equity and the rest 30-35% in fixed income. In balanced advantage funds, you can bring down the net equity exposure significantly below 65% to say 30%. That happens because of the model which is involved in these kinds of funds. This model ranges from valuation-based models to more hybrid kinds of models. The idea here is to reduce the drawdown, to move between equity exposure from say 30% to 80% based on the signals that you are getting on valuation and other trend indicators.
In the process, improve the experience of investors by reducing the overall volatility and improving the overall risk-adjusted return. So, that is where these funds are placed and this is a category
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