Franklin Templeton (India) is launching an open-ended dynamic asset allocation fund called Franklin India Balanced Advantage Fund (FIBAF). The fund intends to generate long-term capital appreciation and income generation by investing in a dynamically managed portfolio of equity and equity-related instruments and fixed income and money market instruments. The New Fund Offer opens on August 16, 2022, and will close on August 30, 2022.
FIBAF offers tactical allocation between equity and debt based on market valuations and fundamental factors-driven views. The product is suitable for those who are not only keen to take advantage of the growth opportunities in equities but also prefer to reduce the impact of market volatility.
Of all the mutual fund categories available to mutual fund investors, the schemes of the Balanced Advantage category hold a unique place as the investment in them is managed dynamically between equity and debt asset classes.
An important distinguishing feature of Balanced Advantage Funds (BAFs) is that they can be a 100 per cent equity fund or it can be a 100 per cent debt fund. Unlike balanced hybrid funds (40 to 60 percent in equities) or aggressive hybrid funds (65 to 80 percent in equities), they can maneuver between the two asset classes in extreme situations.
In practice, therefore, BAFs will have an allocation to both equity and debt in varying proportions. Make sure you check the allocation before investing. Knowing this is also important because if you are looking for BAF with higher equity exposure, you may have to look for another one. Similarly, those looking for higher debt exposure may have to check if the specific BAF is carrying higher debt allocation or not. Making an informed investing decision helps.
However, this may not work at all times. Over time, based on market conditions the fund manager can modify allocation between equity and debt in Balanced Advantage funds. A comparison among BAFs is also a tricky task. If allocation across equity and debt differ amongst them, a comparison in terms of returns may not be the right approach.