Larger balanced advantage funds remain low on equities, shows data

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Majority of the larger balanced advantage funds (BAFs) raised their equity exposure in October after trimming the allocation in the previous months. However, in most cases, the equity exposure remained closer to their respective multi-year low levels. 

At an aggregate level, seven of the larger BAFs had a net equity exposure of Rs 1 trillion, while the rest Rs 1.3 trillion was invested in debt and hedged equity. 

These seven schemes together manage Rs 2.3 trillion. 

BAFs, which invest in both equity and debt assets, mostly determine the equity allocation through valuation metrics. Most of the offerings cut their equity allocation as the valuations go up and vice-versa. 

The equity market corrected substantially in October after logging gains for consecutive months. The Nifty 50 index ended the month down 6.2 per cent. 

Mutual funds were a key support for the market amid record sell-off by foreign institutional investors. Despite the nearly Rs 91,000 crore deployment in the equity market, MFs ended October with higher cash levels. The non-equity portion of BAFs also add to the ‘equity war chest’ of MFs.

 

BAFs of HDFC, ICICI Prudential, Kotak and Aditya Birla Sun Life were among schemes that registered a slight uptick in equity exposure. At the same time, BAFs of SBI, Edelweiss and Tata registered a decline.