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We work only to earn money and so our hard-earned money is considered to one of the most precious things in life. All of us want to grow that money but not many of us are willing to take the associated risks of investment. More often than not, we save our money instead of investing it. And in the entire event, we end up losing a lot of money by not investing it properly at the right time and at the right place.
Have you heard of Asset Allocation?
Well, according to Wikipedia, Asset Allocation is defined as: “Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame.”
Thus, each of us need to first identify our need for investment along with risk appetite and then choose the asset allocation accordingly. If you are not aware of your asset allocation or have no clue of how to do it, its best to trust the best. ICICI Prudential, the largest Asset Management Company in India as on June 2016, has a Balanced Advantage Fund with Dynamic Asset Allocation strategy built in. This fund is best for someone who does not want his or her portfolio re-balancing at regular intervals. It is then done automatically through this strategy.
ICICI Prudential Balanced Advantage Fund.
Let us first understand what a balanced fund is. A balanced fund is a kind of investment where your money is invested in parts in both equities and debt with a cash component. The Fund Manager decides on the percentage of investment in equity and debt depending on the fund object, i.e. dynamic asset allocation as well as expected market performance.
This fund invests in equity derivatives so as to minimize risks and provide a hedge. It has a judicious mix of equity, debt and cash components in its portfolio. Thus, this fund allows you to participate in the equity market with controlled risks. This can be considered a step before plunging into equity whole-heartedly. In fact, this fund is good for conservative investors who want some equity exposure and double digit returns.
Background and Performance:
ICICI Prudential Balanced Advantage Fund is one of the best in the balanced fund category. The fund was launched in December 2006 and is about to turn 10 years old soon. The risk quotient of this fund is considered a Moderately High and is benchmarked against CRISIL Balanced Fund Aggressive. It is an open-ended fund and accepts minimum investment amount of Rs 5000 and SIP of Rs 1000.
There is exit load of 1% in this fund for the initial 540 days in excess of 20% for redemption.
The fund has performed quite well vis-à-vis benchmark:
Source: Value Research Online
Also, since balanced funds provide equity taxation, your portfolio becomes completely tax free if held for a period of more than 365 days since Long Term Capital Gain Taxation for equity oriented funds is NIL.
Bottomline
A balanced fund, is also called Hybrid Fund because of its unique equity debt combination portfolio. It has equity of 65% but mostly in derivatives which provides a hedge or a safety net against the volatility. Thus, if you are someone who likes to play it safe with your money, you can very well consider investing in a balanced fund. Just make sure you find a good fund manager who can actively move your funds around. Considering all of this, ICICI Prudential Balanced Advantage Fund is a good choice and can surely be considered.
A balanced fund is a great stepping stone through which you can enter the world of investments and ICICI Prudential Balanced Advantage Fund is one of the best in that category. Once you understand the way the markets work and have more faith in the investment tools available, you can move on to higher risk funds such as the equity funds. Till then, the balanced funds can prove to be your trusted friends.
That it "Mutual Fund Investing: The Balanced Way", Hopefully it can give information For you. Thanks YourInsuranceStep Update.