Last Updated on November 4th, 2016

Introduction
Indians are one of the biggest savers globally. While major portion of these savings are channeled into bank fixed deposits; investments into equity mutual funds are the lowest. The savers / investors are attracted towards bank fixed deposits as they offer safety of capital along with fixed returns. However, the tax adjusted returns from bank fixed deposits barely beat inflation. At the same time the savers / investors consider equity mutual funds risky and volatile.

Most investors look for an enviable investment combination of growth with safety. ICICI Prudential Balanced Advantage Fund strives to precisely offer this enviable combination of growth with safety.

ICICI Prudential Balanced Advantage Fund
It is an open ended equity fund that aims to make investing easy and less stressful, by allocating funds between different investment options as per changing market conditions. The fund invests in a mix of cash equities (mix of large and mid-sized companies), equity derivatives and debt instruments (Government securities, corporate debt and money market instruments). Derivatives are used to hedge the portfolio against the downside risks, thereby allowing it to generate low volatility returns. So there is exposure to equity markets with controlled risk.

Dynamic asset allocation
The fund follows a dynamic asset allocation strategy of increasing exposure to equities when equity markets are trading at lower price to book (P/B) value (buying low) and exiting equities and increasing exposure to debt when equity markets are trading at expensive price to book (P/B) value (selling high). This strategy ensures that you don’t have to worry about when to enter and exit the market. The equity portion provides the much needed growth to your investments whereas the debt portion provides safety and stability.

Who should invest?
The fund is ideal for investors looking to generate long term wealth by participating in the equity markets with risk mitigation capability. The fund falls under ‘moderately high’ risk category. Investors should consult their financial adviser to understand whether the product is suitable for them. The investment time horizon should be of 3 years and more.

Fund features

Plan	Regular plan can be opted by investing through a financial adviser. Investor can approach fund house directly for direct plan.
Options	Growth or dividend option.
Load and investment amount	Entry load is nil. Monthly systematic investment plan (SIP): Minimum amount is Rs. 1000 + 5 post-dated cheques for a minimum of Rs. 1000 each. For redemption of amount invested up to 2 years, the exit load is 1% and beyond that it is nil.
Exemption from long term capital gains tax	The fund is categorised as an equity fund (equity component is more than 65%) and hence the long term capital gains tax (for holding period more than 1 year) is nil.
Other details	Fund launch: December 2006 Assets under management (AUM): Above Rs. 15,000 crores (September 2016) Fund managers: Equity portion – Manish Gunwani, Ashwin Jain and Rajat Chandak Debt portion – Manish Banthia

Returns generated by the fund for its investors

The above table shows how the fund has consistently delivered superior returns as compared to the Benchmark (CRISIL Balanced Fund – Aggressive Index) and the Nifty 50 index. Since its inception (Dec 2006) the fund has generated a CAGR return of 11.41%.

Note: Past performance may or may not be sustained in future.

Conclusion
The fund follows dynamic asset allocation strategy. When markets rise continuously over a period of time, due to low equity exposure, during such times the fund may generate decent returns but may not be able to beat its peers. But the fund advantage is that when markets fall sharply, the downside risk is limited. The fund can generate decent returns even during volatile times. The fund returns have been able to beat the benchmark returns consistently.

If you are the type of investor who has an investment horizon of 3 years or more and is looking for investment returns higher than debt markets but with low volatility as compared to equity investments, then you may consider this fund for investment.

Standard Disclaimer: Mutual fund investments are subject to market risks, read all scheme related documents carefully.