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The ITI Balance Advantage Fund (BAF), an open-ended dynamic asset allocation fund, was launched in 2019 with Nifty 50 Hybrid Composite Debt 50:50 Index as its benchmark index.
The investment objective of the Scheme is to seek capital appreciation by investing in equity and equity related securities and fixed income instruments. The allocation between equity instruments and fixed income will be managed dynamically so as to provide investors with long term capital appreciation. However, there can be no assurance that the investment objective of the scheme will be realized.
Since its inception, the fund has delivered returns of 19.31% and 9.48% in one-year and three-year, respectively for the period ending on November, 2024. As on 31 December 2024, the AUM of the fund stands at Rs. 388 crore.
The importance of dynamic asset allocation
An in-house dynamic asset allocation model is the core strength of the fund. The strategy adapts to market conditions to maximize returns while minimizing risks. Diversified asset classes included in the fund portfolio provides unique strengths to the fund.
Equity Assets – This asset class helps the fund to tap into the high return potential of the market
Debt or fixed-income instruments – They aim to provide stability with moderate returns while mitigating the risks or at very lower risk
Arbitrage strategies – These strategies helps the fund to exploit market inefficiencies to give a return that is less correlated to the broader market trends. This adds an additional layer of diversification boosting the risk-adjusted performance of the fund
This blend of risk and return allows the fund to deliver performance by help of mitigating the impact of market volatility and economic uncertainties.
The factor that could help in the investment decisions
- Price-to-Book Value (P/BV) - Evaluates the valuation levels of equity markets
- Earnings Yield - Assesses the attractiveness of equities compared to fixed-income instruments
- Sentiment Cycle - Incorporates a mix of objective and subjective evaluations of market sentiment
The price-to-book value and earnings yield are dependent on the data-based analysis.
On the other hand, the sentiment cycle related decisions are driven by the blend of subjective an objective view of the ongoing market trends. This is a guiding factor of various trends which indicate the overall cumulative trends like FII & DII Flows, India’s GDP estimates, MF Flows, Currency rate trends, India VIX, Arbitrage rollover spreads etc. However, this is an indicative list of various data points which impact market sentiments.
Selection of asset classes
Equity – The equity component of the fund focuses on quality and growth potential of the stocks. The fund selects the stocks with strong fundamentals and long-term performance capabilities.
Debt – The fund aims to prioritizes safety and stability of the fixed income instruments before deciding to include them in the portfolio.
Conclusion: A Balanced, Dynamic Approach to Investing
ITI Balanced Advantage Fund follows a flexible and data-driven approach to asset allocation, seeking to optimize returns while managing risk through dynamic adjustments based on market conditions. By blending high-quality equities, fixed income, and risk-mitigating strategies.
ITI Balanced Advantage Fund
(An open ended dynamic asset allocation fund)
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Disclaimer: All figures and data given in the document are dated unless stated otherwise. In the preparation of the material contained in this document, the ITI Asset Management Limited (“AMC”) has used information that is publicly available. However, the AMC does not warrant the accuracy, reasonableness and/ or completeness of any information. The information provided is not intended to be used by investors as the sole basis for investment decisions, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific investor. Investors are advised to consult their own legal tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of ITI Mutual Fund. The information contained herein should not be construed as a forecast or promise nor should it be considered as an investment advice. The AMC (including its affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not be liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. The statements made herein may include statements of future expectations and other forward-looking statements that are based on our current views and scenarios and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this information.
