Kotak Balanced Advantage Fund: Advantageous For Your Portfolio? (2024)

An open-ended dynamic asset allocation fund.

Scheme details of Kotak Balanced Advantage Fund

Investment Objective of Kotak Balanced Advantage Fund*

(Image source: creative-common-images.com)

*Source: Scheme Information Document

(Read: What You Should Read In A Scheme Information Document)

Is Kotak Balanced Advantage Fund for you?

Kotak Balanced Advantage Fund (KBAF) being a dynamic asset allocation fund will hold the flexibility to invest across equity, debt and money market instruments.

KBAF may also invest upto 10% of its total asset in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Further, for the purpose of hedging and portfolio rebalancing, KBAF may invest in derivative instruments (viz. index futures, stock futures, index options, stock Options, warrants, convertible securities, swap agreements, etc.) as permitted by the regulatory guidelines.

This is the only open-ended equity mutual fund by Kotak Mahindra Mutual Fund that has a mandate to dynamically manage between equity and debt.

Hybrid funds provide thebenefit of diversificationwithin each asset classes i.e. equity and debt. So, within equity, you benefit from wide diversification across stocks and sectors, while in debt, across fixed instruments and maturity of papers.

The hybrid nature of the fund allows the fund manager to increase exposure towards debt investments when outlook appears favourable to do so, thereby facilitating mitigating the risk (associated with equities) and rewarding investors with appealing returns.

KBAF is suitable for investors with moderate-to-high risk appetite and an investment time horizon of at least 5 years.

Asset Allocation of Kotak Balanced Advantage Fund

The asset allocation of Kotak Balanced Advantage Fund under normal circ*mstances will be as under:

Note: Although the gross equity exposure would be maintained between 65%-100%, the net equity exposure can be brought down significantly below 65% by hedging through equity derivatives

Further it is stated in the offer document that:

• The scheme may use derivatives as permitted by SEBI from time to time

• The scheme may also use fixed income derivatives instruments subject to guidelines as may

  See Also

  3 REIT Stocks to Buy Hand Over Fist in March | The Motley FoolWhat's a REIT (Real Estate Investment Trust)?7 Reasons To Invest In Australian Real Estate Investment TrustThree Industrial REITs out of Fourteen

• be issued by SEBI and RBI from time to time

• The scheme may invest in securitized debt upto 50% of the debt allocation

• The scheme will invest upto a maximum of 35% of its net assets in foreign securities

• The scheme may invest in another scheme of the Kotak Mahindra Mutual Fund or any other Mutual Fund without charging any fees

• The scheme shall participate in the corporate bond repo transactions

• The scheme may invest in listed/unlisted equity shares as per the extant SEBI (Mutual Funds) Regulations, 1996

(Source: Scheme Information Document)

Investment Strategy Of Kotak Balanced Advantage Fund

(Image source: thebluediamondgallery.com)

The equity and debt exposure in the portfolio of Kotak Balanced Advantage Fund will be dynamically managed with no restriction on the minimum or maximum exposure to each. It will depend on the fund manager’s view of the market.
The extent of equity exposure will be dependent on the following among many others:

• The fund manager‘s outlook of the overall economic scenario in the country

• Global events

• Market conditions

• Valuation factors (viz. Price to Earnings (PE), Price to Book Value (P/B), Earnings Yield etc.)

• Momentum factors

• Interest rate scenario

And within the equity allocation, the portfolio construction will be based on a thematic approach to bottom-up stock picking using the Business, Management and valuation (BMV) model. The fund manager will evaluate the following aspects among others:

• The business environment that a company operates in;

• The capability of the management to execute and scale up the business; and

• Valuation of the company based on fundamentals like discounted cash flows and PE ratios

As regards the portfolio turnover, there is no specific target with respect to the turnover of the scheme. However, it is expected to be moderate under normal circ*mstances.

Who will manage Kotak Balanced Advantage Fund

(Image source: thebluediamondgallery.com)

Kotak Balanced Advantage Fund’s equity portfolio will be managed by Mr Deepak Gupta and Mr Harish Krishnan; while the debt and money market portion will be managed by Mr Abhishek Bisen. Investments in foreign securities will be managed by Mr Arjun Khanna.

Mr Deepak Gupta has 13 years of experience in the mutual fund industry and 11 years of experience in fund management related areas. He is a Graduate in Commerce, a Chartered Accountant, Cost Accountant and has also cleared the CFA (US, AIMR) - Level III.

Some of the other funds managed by him are Kotak Asset Allocator Fund, Kotak Sensex ETF, Kotak PSU Bank ETF, Kotak Nifty ETF, Kotak Banking ETF along with few other funds.

Mr Harish Krishnan, too, has 13 years of experience, spread over Equity Research and Fund Management. Prior to joining Kotak Mahindra Mutual Fund, he was based out of Singapore and Dubai, managing Kotak's offshore funds. He has also worked at Infosys Technologies Ltd in his earlier stint.

Mr Krishnan has to his credit a Bachelor of Technology (Electronics & Communications) degree from Government Engineering College, Trichur, is a Post Graduate in Management from Indian Institute of Management, Kozhikode and is a Chartered Financial Analyst.

The other funds managed by him are , Kotak Bluechip Fund and Kotak India Growth Fund Series 5

Mr Abhishek Bisen has been associated with the company since October 2006. Prior to joining Kotak Mahindra Mutual Fund, he has worked with Securities Trading Corporation Of India Ltd where he was looking at sales and trading of fixed income products apart from doing Portfolio Advisory. His earlier assignments also include 2 years of merchant banking experience with a leading merchant banking firm.

The funds under his management are Kotak Bond, Kotak Mahindra Gilt Unit Scheme 98, Kotak Debt Hybrid, Kotak Gold Fund, Kotak Global Emerging Market Fund, Kotak Equity Savings Fund, Kotak Equity Hybrid and Kotak Capital Protection Series 1, 2,3 & 4

Mr Arjun Khanna has over 11 years of experience, out of which 10 years have been with Mutual Funds in Equity Research. Prior to joining Kotak Mahindra Mutual Fund, he has been associated with Principal Mutual Funds and Citibank N.A.

Mr Khanna has to his credit a Bachelor of Engineering (Electronics) degree, Masters of Management (Finance) from Jamnalal Bajaj Institute of Management Studies and is a CFA.

The other funds managed by Mr Khanna are , Kotak Bluechip Fund Kotak Equity Hybrid, Kotak Debt Hybrid and a few more.

Fund Outlook for Kotak Balanced Advantage Fund

The launch of Kotak Balanced Advantage Fund comes at a time when the Indian equity market is yet again near its all-time high.

Correspondingly, also at a time where the Indian rupee is vulnerable, oil prices have escalated, India’s trade deficit has widened (hit a 5-year high in June 2018 to US$ 16.6 billion), and that potentially can impact retail inflation, India’s current account deficit and fiscal deficit adversely. Such a scenario appears challenging even to invest in the Indian debt market, particularly in longer maturity papers.

Nevertheless, the dynamic asset allocation mandate of the fund, come as a precaution provided the fund manager uses it thoughtfully to construct the investment portfolio, both equity and debt.

The fortune of the Kotak Balanced Advantage Fund will be closely linked to how the fund managers play their strategy while building the portfolio.

[Read: Why You Should Be Careful About Investing In NFOs]

1. Money Simplified Services Limited;
2. PersonalFN Insurance Services India Limited ;
3. Equitymaster Agora Research Private Limited;
4. Common Sense Living Private Limited;
5. Quantum Advisors Private Limited;
6. Quantum Asset Management Company Private Limited;
7. HelpYourNGO Private Limited;
8. HelpYourNGO Foundation;
9. Natural Streets for Performing Arts Foundation;
10. Primary Real Estate Advisors Private Limited;
11. Rahul Goel;
12. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest

1. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company, except QIS receives fees for providing research to Quantum Equity Fund of Fund (QEFoF) which is Fund of Fund scheme managed by QMF and our associates has financial interest in the subject company.
2. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report.
3. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront /annualized & trail), if any, for any Schemes by QMF to QIS is also at arm's length and as per prevailing market practices.
   

Disclosure with regard to receipt of Compensation

1. Neither QIS nor it's Associates have any compensation from the subject Company in the past twelve months.
2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company in the past twelve months.
3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company in the past twelve months.
4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months, except that QIS had receive fees for services under sponsorship agreement from Franklin Templeton Asset Management India Pvt. Ltd.
5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report
   

General disclosure

1. The Research Analyst has not served as an officer, director or employee of the subject Company.
2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.
   

Subject Company means Mutual Fund Schemes

Quantum Information Services Pvt. Ltd. 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Tel: +91 22 6136 1200
Website : www.personalfn.com CIN: U65990MH1989PTC054667

Add Comments