All you need to know about Bajaj Finserv Balanced Advantage Fund

Bajaj Finserv Balanced Advantage Fund (BAF) is an open-ended dynamic asset allocation fund designed for investors seeking exposure to equity and equity-related instruments, including derivatives and fixed-income instruments.

The scheme which comes under the hybrid funds category opened for subscription on November 24 and will close on December 8.

• Table of contents

1. What is Bajaj Finserv Balanced Advantage Fund?
2. How Does Bajaj Finserv Balanced Advantage Fund Work?
3. Benefits of Bajaj Finserv Balanced Advantage Fund
4. Who should consider this scheme?
5. How to Invest in Bajaj Finserv Balanced Advantage Fund?
6. Bajaj Finserv Balanced Advantage Fund NFO Details

Bajaj Finserv BAF uses a unique investment model that combines an approach of behavioural sciences and financial insights. By using this asset allocation technique, investors may seek benefits to navigate market volatility and optimize returns. Rather than using only quantitative models to decide allocation, the Bajaj Finserv AMC investment team analyses behavioural aspects as well, which may help investors earn relatively better returns over the long term.

The primary aim of the Bajaj Finserv Balanced Advantage Fund is to harness the potential upside of equities while mitigating downsides. This is achieved through dynamic portfolio management, encompassing investments in equity, debt, money market instruments, and derivatives. It's important to highlight that this scheme incorporates a behavioural edge to counter emotion-driven investment decisions.

What is Bajaj Finserv Balanced Advantage Fund?

The Bajaj Finserv Balanced Advantage Fund is a hybrid mutual fund that invests in a combination of equity and debt instruments, adjusting its allocation based on market conditions.

Key features:

Diversification: By investing in both equity and debt, the fund offers diversification, which can lower overall portfolio risk.

Potential for long-term growth with relative stability: The equity portion offers the potential for capital appreciation, while the debt component aims to provide relative stability and potential for income generation.

Risk level: The fund’s risk level can fluctuate depending on the equity-debt mix. The Bajaj Finserv Balanced Advantage Fund seeks to maintain an equity-oriented portfolio and is thus categorised as very high risk.

How does Bajaj Finserv Balanced Advantage Fund work?

The Bajaj Finserv Balanced Advantage Fund follows a dynamic asset allocation strategy, where the fund manager actively adjusts the mix of equity and debt instruments to balance risk and potential returns.

Here’s a simplified breakdown of its functioning:

1. Dynamic asset allocation: Fund managers closely monitors market conditions, such as economic indicators, interest rates, and trends. Based on this analysis, they determine the optimal equity-debt allocation.

2. Equity exposure: When the market outlook is positive, the manager may increase the equity portion to seize growth opportunities.

3. Debt exposure: During volatile or uncertain periods, the manager may shift more funds to debt instruments like government or corporate bonds to reduce risk and provide relative stability.

4. Rebalancing: The allocation is not fixed; the manager regularly rebalances the portfolio to maintain the desired mix, adjusting to market shifts.

Benefits of Bajaj Finserv Balanced Advantage Fund

• Dynamic Asset Allocation: In response to market conditions, the fund adapts its asset allocation dynamically, providing a flexible approach to optimize returns and manage risk.
• Optimizing Returns: Actively pursuing growth opportunities, the scheme focuses on intelligent investment decisions aligned with its dynamic allocation strategy.
• Risk Management: Vigilantly monitoring potential risks, the fund aims to limit the impact of market volatility on invested capital.
• Navigating Market Volatility: The fund's strategy is crafted to navigate market fluctuations, offering relative stability and minimizing the impact of abrupt market movements on your investment.
• Adapting to Change: In the ever-evolving realm of investments, the fund is equipped to adapt to change, striving to ensure that your portfolio remains resilient and responsive to market dynamics.
• Long-Term Perspective: Bajaj Finserv Balanced Advantage Fund is well-suited for investors with a long-term horizon. The fund's strategy aligns with the goal of capitalizing on the potential of equities over an extended period, emphasizing the significance of sustained growth.

Who should consider this scheme?

This scheme is for investors who:

• Desire dynamic asset allocation in their portfolio.
• Seek diversification to manage risk effectively.
• Prefer professional fund management to navigate market complexities.
• Aspire for potential capital appreciation over the long term while mitigating downside risk.
• Have a long-term investment horizon and value the benefits of sustained growth over time.

How to invest in Bajaj Finserv Balanced Advantage Fund?

Here’s how you can invest in the Bajaj Finserv Balanced Advantage Fund:

1. Complete the KYC (Know Your Customer) process: If you haven’t completed it already, you need to undergo the KYC process with a registered KYC Registration Agency (KRA). This involves submitting documents like your PAN card, address proof, and identity proof.

2. Choose an investment platform: Direct investment: You can invest directly with Bajaj Finserv Mutual Fund through their website or by visiting their office. You can also invest via online platforms or mutual fund distributor/agent.

3. Choose the investment mode:

Lumpsum investment: Invest a single amount at one time.

Systematic Investment Plan (SIP): Invest a fixed amount at regular intervals, such as monthly or quarterly. SIPs help smooth out market fluctuations, making them a popular choice for long-term investing.

4. Submit the investment application: Fill out necessary details such as the amount, investment mode, and bank account details.

Bajaj Finserv Balanced Advantage Fund: Risk factors

The Bajaj Finserv Balanced Advantage Fund, like all investments, involves certain risks. Here are the main risk factors to keep in mind:

Market risk: The fund’s performance is tied to the overall market. During market volatility or downturns, the fund’s value may fluctuate, potentially leading to losses.

Risk to equity component: Since the fund invests in equities, it is exposed to market fluctuations influenced by factors such as economic conditions, political events, and company performance.

Risk to debt component: The fund also holds debt instruments, which involve risks like interest rate fluctuations, credit risk, and liquidity risk.

Fund manager risk: The fund’s performance depends on the fund manager’s assessment of market conditions and their allocation decisions.

Liquidity risk: In some market conditions, it may be challenging to sell securities quickly or at a fair price, potentially impacting liquidity.

Conclusion

The Bajaj Finserv Balanced Advantage Fund provides a dynamic investment strategy by actively adjusting its asset allocation between equity and debt instruments. This strategy aims to take advantage of market opportunities while mitigating risks associated with market volatility.

Before investing, it's important to assess your investment objectives, risk tolerance, and time frame. Perform thorough research or consult a qualified financial advisor for well-informed decisions. Keep in mind that past performance does not guarantee future results, and mutual fund investments carry inherent risks.

FAQs

How does Bajaj Finserv Balanced Advantage Fund mitigate market risks?

The Bajaj Finserv Balanced Advantage Fund mitigates market risks through a dynamic asset allocation strategy, balancing equity and debt investments based on market conditions. During downturns, it shifts to safer debt assets, while upturns see increased equity exposure. Strategies include valuation-based adjustments, quantitative models, and expert fund manager discretion.

What is the minimum investment required for Bajaj Finserv Balanced Advantage Fund?

The Bajaj Finserv Balanced Advantage Fund requires a minimum initial investment of Rs. 500 for SIP as well as lumpsum.

Does Bajaj Finserv Balanced Advantage Fund charge any exit load?

The Bajaj Finserv Balanced Advantage Fund applies an exit load of 1% on redemptions exceeding 8% of the investment amount initiated within 6 months of allotment. For amounts below 8% or redemption requests made after six months of allotment, there is no exit load.

Is the Bajaj Finserv Balanced Advantage Fund suitable for beginners?

The Bajaj Finserv Balanced Advantage Fund can be a suitable starting point for beginners due to its diversification and professional management. However, beginners should be aware of volatility and the need for a long-term investment horizon. It's important to understand your risk tolerance and consult a financial advisor.

How is Bajaj Finserv Balanced Advantage Fund different from other hybrid funds?

The Bajaj Finserv Balanced Advantage Fund (BAF) combines behavioural finance insights with financial insights for its investment approach. This unique approach aims to navigate market volatility and optimize returns by analyzing both quantitative models and investor behaviour patterns. The goal is to balance equity growth potential with risk mitigation through diversified investments.

Can I invest in Bajaj Finserv Balanced Advantage Fund through SIP?

Yes, you can invest in the Bajaj Finserv Balanced Advantage Fund through SIPs. SIPs allow for consistent, disciplined investing, helping average out costs over time and reduce the impact of volatility.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as an endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purposes only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.