There is a famous saying in America that the time to prepare for a perfect storm is not when the wind is tearing the roof off your house, but before the storm hits. This saying works fit for the financial market which is highly volatile as of now, and investors should balance their portfolio by investing in diversified assets. This will help them to protect their capital and work for long-term capital appreciation. One such fund in the category that is analysed by the financial analysts of MySIPonline is ICICI Prudential Balanced Advantage Fund. The fund has adopted the dynamic asset allocation approach which helps the investor to increase diversification in their portfolio.
An Overview of ICICI Prudential Balanced Advantage Fund
How Can Re-Balancing Portfolio Downside Risk?
The dynamic asset allocation of ICICI Prudential Balanced Advantage includes such portfolio which manages physical securities such as stocks or bonds, or implementing overlay-based strategies including arbitrage opportunities. This replaces the complexity for the investors as well as reduces their overall risk.
At the same time, the risk measures of the fund also show that it is less volatile than its category. The SD of the fund is lower than its peers as well as the benchmark. Higher Sharpe ratio also shows that the fund can manage to offer risk-adjusted returns which make it one of the best funds in the category.
As per the financial analysts of MySIPonline, the fund has performed well than other funds which is cleary seen through its alpha that is negative, but outperforming its category. All these facts show that it is a good fund that helps the risk-averse investors to downside risk in their portfolio by re-balancing capital in multiple assets.
Besides this, if we look at the overall performance of the fund, it has performed well in the overall market cycles. When in the year 2014 and 2015, the market was going through bull and bear phase, both and Sensex had delivered the CAGR of 5.4%, but it has given the CAGR of 15% approximately.
These returns depict that the fund keeps the technique to perform well even when the market takes a downturn. This also reduces the overall risk for the investors, as the fund management team has the calibre to offer sustainable returns by reducing the volatility.
Benefits in Volatile Market
ICICI Prudential Balanced Advantage Fund Growth Scheme invest across various assets on the basis of the market conditions. It increases or decreases its exposure to the equities on the basis of the market valuations and volatility. It uses price to book value (P/BV) measure to decide its allocation strategy and changes allocation in equities and debt depending on the P/BV ratio prevailing in NIFTY. This investment strategy diminishes the volatility in the portfolio of the fund and helps investors to minimise risk.
In sharp corrections also, a mix of debt and equity portfolio would face lower volatility than a pure equity fund. As per the financial analysts of MySIPonline, this mix of assets will give a good experience to the one who is not penchant to high-risk as well as novice investors.
Therefore, the investors who have invested in equity funds or don’t want to invest in pure equity schemes due to the volatility can invest in ICICI Prudential Balanced Advantage Fund G, which will limit the downside risk without hitting returns too much.
For more information regarding this fund, you can connect with us via call or email. You can also submit your queries regarding investment in the regular plan of ICICI Pru Balanced Advantage submit it here https://goo.gl/WofRJm, and we will get back to you as soon as possible.
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