FIBAF is a dynamically-managed fund. Like other blanched advantage funds or BAFs, the equity exposure will be maintained between 65% and 100%. At any point, if the equity allocation falls below 65%, the gross equity exposure will be maintained using equity derivatives. Debt instruments will make up for the rest.
The NFO will open for subscription on August 16 and will close on August 30.
Avinash Satwalekar, President, Franklin Templeton–India, said, “ This new fund is for investors looking for a balanced exposure to equity and debt over the longer term while also capitalizing on opportunities provided by the market from time to time. Apart from the benefits of diversification, this formula-driven approach with its in-built ‘buy-sell’ discipline helps to negate the behavioural biases caused due to emotions of greed and fear.”
Anand Radhakrishnan, Managing Director & Chief Investment Officer – Emerging Markets Equity – India, Franklin Templeton, said, “Global equity markets have corrected in recent months and continue to be volatile amidst multiple headwinds of inflation, interest rate and ongoing geopolitical tensions. Indian markets have also been impacted but have held up much better compared to major developed and EM counterparts (in dollar terms). Such episodes of market volatility can push investors off-course leading them to take sub-optimal decisions. With that in mind, Franklin India Balanced Advantage Fund will adopt a flexi-cap approach for equity allocation. The scheme will endeavour to invest in high quality instruments with over 80% of fixed income portfolio in AAA-rated papers. This makes it suitable for investors looking for the best of both worlds. The asset allocation is derived from Franklin Templeton’s in-house proprietary dynamic asset allocation model and an active stock selection process similar to a flexi-cap portfolio. We believe this will help improve outcomes for investors by enabling them to stay invested over longer periods.”
“We will use a combination of quantitative and qualitative factors to determine the equity asset allocation. The quantitative parameter would be based on the month end weighted average Price to Earnings (P/E) ratio and Price to Book Value (P/BV) ratio of the Nifty 500 Index. As per the ratio bands, the corresponding equity allocation will be identified for both P/E and P/BV separately. These parameters will be accorded 50% weightage each and added to arrive at the final equity allocation. We would also overlay the quantitative parameter-based equity allocation with a qualitative assessment of various factors such as macroeconomic trends, policy backdrop, aggregate corporate fundamentals, market liquidity models etc,” said K Rajasa, VP & Portfolio Manager– Franklin India Balanced Advantage Fund.
The legal battle surrounding the shutting down of six debt mutual fund schemes of Franklin is still on in the SAT. Earlier, SEBI has levied big penalties on the top brass of Franklin Templeton India and the fund house was asked to return the fund management fees levied in all the six shut schemes. SEBI had also barred the fund house from launching any new debt scheme for two years. The new hybrid fund will be Franklin Templeton’s second innings after 2020.