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ICICI Prudential AMC’s Balanced Advantage Fund (BAF) has the crossed ₹10,000-crore landmark for assets under management. This stood at just ₹600 crore two years ago. This open-ended equity fund aims to take out the worry that investors face regarding the timing of entering and exiting the market.
Contrarian approachThe product has a simple philosophy — if equity markets go up, it will reduce the equity exposure and get into debt; and if the equity markets go down, the fund will increase its exposure to equity.
According to Nimesh Shah, MD & CEO, ICICI Prudential AMC, typically, retail investors show confidence in the market only when it is flying high. But by then stocks would have turned expensive. The Balanced Advantage Fund (BAF) addresses this issue by adopting a contrarian approach. Nimesh said the dynamic asset allocation ensures that emotions are removed from the decision.
“If the market (Sensex) goes to 29,000-levels, you don’t have to think, whether the market is high or low. You just give the money to us. We have put an algorithm in place with lot of parameters, including price-to-book ratio. As the PB ratio goes up, I sell. When it comes down, I buy. Today, when we are back to 26,000 levels after one year, during a period when markets went down, the retail investor has not made money. But this fund has always made money,” he said.
Returns at both endsProviding further statistics, he said, “When the markets dropped 18 per cent, this fund dropped only 2 per cent. When the markets fell 10 per cent, it has given 6 per cent return. So, even in the worst of times, say, if you have entered the market at the highest and exited at the lowest point, the fund has given a minimum return of 6 per cent.”
Nimesh said this ability to give better returns with lesser risk will ensure that retail investors keep faith with the fund. Nimesh has been evangelising the fund to all his contacts. He said, “Everyone from my gym instructor to my milkman, or my kids’ teachers, I don’t give them money. I now give them the BAF and put them onto a systematic investment plan.’
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