NJ Balanced Advantage Fund: A Balanced Approach to Investing
NJ Balanced Advantage Fund, a hybrid dynamic asset allocation fund and high-quality equity portfolio, adapts to changing market scenarios with its rule-based investment approach.
Hybrid funds, curated specially for risk-averse investors, combine stability and growth through a mix of debt and equity allocation with the aim of offering investors the best of both worlds. Within this category, Balanced Advantage Fund, commonly referred to as BAF, is a unique fund that provides a dynamic approach to this strategy.
Understanding Dynamic Asset Allocation in BAF
Dynamic Asset Allocation in BAF refers to changing the proportion of total funds allocated to debt and equity based on the current market conditions and economic factors. Among the many approaches to leverage different market situations, one strategy can be to increase equity exposure for growth potential when market valuations decline and decrease it when markets begin to peak to lock in gains.
BAFs are characterized by inherent flexibility in terms of changing the asset allocation vis-à-vis a traditional hybrid fund having fixed asset allocation. For example, in anticipation of a market downturn, it might shift from 60% equity to 40% to reduce risk, while a traditional balanced fund would remain fixed at 60% equity, potentially facing greater losses.
NJ Balanced Advantage Fund
NJ Balanced Advantage Fund prioritizes quality while implementing its rule-based strategy for dynamic equity allocation and stock selection. A universe of equity stocks is screened using forensic filters and a number of other criteria, such as low volatility, value, and momentum. Finally, NJ BAF chooses and invests in high-quality companies with high and consistent ROE, high and consistent dividend payouts, and low debt, to avoid quality traps.
Equity Allocation Timeline
The graph below illustrates how the Equity Allocation of NJ BAF adjusts to shifting market conditions and demonstrates a flexible strategy for asset allocation that places a high value on quality.
Source: NJ Asset Management Pvt. Ltd., BSE. Equity Allocation refers to the equity allocation suggested by the asset allocation model for NJ Balanced Advantage Fund on its respective rebalance dates. The Equity Allocation is calculated based on proprietary methodology. Simple Average of last 1 month’s PE of Sensex is taken to show 1M Average PE.
Genuine Diversification with Low Overlap
The Equity Portfolio of NJ Balanced Advantage Fund has a Low Overlap with the NIFTY 500 Index (15.72%) which offers investors an opportunity to gain genuine diversification benefits, along with the inherent rule-based diversification of fund management.
Source: NJ Asset Management Internal Research, CMIE, NSE, ICRA MFI Explorer. NOTE: As on 30th September 2024. % Overlap Against Peer Group is calculated as the simple average of % overlap of NJ Balanced Advantage Fund, respectively, against each of the live schemes i.e. all open-ended and close-ended (if any) in the Balanced Advantage Fund category, respectively, based on the unhedged equity portfolio holdings as on 30th of September 2024. % Active Share is equal to (100% - % Overlap). Past data may or may not be sustained in future
Quality Characteristics of NJ Balanced Advantage Fund
The tables below highlight NJ BAF’s quality characteristics compared to its benchmark, the Nifty 500, emphasizing the fund’s commitment to maintaining a true-to-label high-quality portfolio.
NOTE: Simple averages of Quality parameters mentioned above for the respective portfolio constituents as on 31st October 2024. Lending companies are excluded from the calculation of Average Portfolio Debt To Equity for the portfolio. Financial companies are excluded from the calculation of Average Portfolio Current Ratio for portfolio. Source: NJ Asset Management Internal Research, CMIE, NSE
Key Benefits of Investing in NJ Balanced Advantage Fund
Investing in the NJ Balanced Advantage Fund (BAF) is ideal for investors seeking wealth creation over a long time with a quality-focused approach. Some key reasons for investing in the fund are as follows:
- Quality-Driven Approach: NJ BAF prioritizes high-quality companies with strong fundamentals, ensuring investments in businesses that have low debt, high and consistent ROEs, and high and consistent dividend payments.
- Rule-Based Investment Philosophy: With the support of NJ AMC’s proprietary Smart Beta platform, NJ BAF follows a disciplined and process-driven approach to asset allocation and security selection process that eliminates human biases.
- Genuine Diversification: The fund offers a unique portfolio that provides the benefits of diversification as it has low overlap with the index.
- Dynamic Asset Allocation (DAA): Through DAA, NJ BAF seeks to provide effective risk management in both bullish and bearish markets, by balancing stability with growth potential according to prevailing market conditions.
What Sets NJ Balanced Advantage Fund Apart?
A disciplined, rule-based, and quality-focused approach to investing is what sets NJ Balanced Advantage Fund apart. The fund's systematic approach ensures consistent decision-making without emotional biases.
With the support of our in-house NJ SmartBeta Platform, the fund rigorously analyzes historical data to refine its strategy through detailed back-testing, increasing its dependability throughout market cycles. Furthermore, its focus on creating a high-quality diversified portfolio along with dynamic and tactical asset allocation based on market conditions provides an additional benefit.
Performance of NJ Balanced Advantage Fund
Since its inception, As on 31st October 2024, NJ Balanced Advantage Fund - Regular Plan - Growth Option has generated a CAGR of 10.87%*, outperforming its benchmark, NIFTY 50 Hybrid Composite Debt 50:50 Index, which has generated a CAGR of 9.41%** during the same period.
As a result, ₹10,000/- invested in NJ Balanced Advantage Fund - Regular Plan - Growth Option, Since its inception, would have grown to ₹13,640.00^ as on 31st October 2024, while the same amount invested in its benchmark, NIFTY 50 Hybrid Composite Debt 50:50 Index, for the same period, would have grown to ₹13,105.13^^
Inception date of the Scheme is October 29, 2021. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. The scheme has been in existence for more than 1 year but less than 3 years or 5 years, hence data for 3 year and 5 years is not provided. Different plans shall have different expense structures. In case the start/end date is a non business day, the NAV of the previous day is used for computation. Mr. Viral Shah is managing the Fund since October 20, 2022 and is also Fund Manager of NJ Flexi Cap Fund, NJ Overnight Fund and NJ ELSS Tax Saver Scheme. Mr. Dhaval Patel is managing the scheme since March 8, 2023 and manages other scheme namely NJ Arbitrage Fund, NJ Overnight Fund, NJ ELSS Tax Saver Scheme and NJ Flexi Cap Fund. Mr. Vishal Ashar is Fund Manager for arbitrage portion of the Scheme since March 8, 2023 and manages one more scheme namely NJ Arbitrage Fund. For the performance of the Direct Plan of the Scheme and the other schemes managed by the Fund Managers, please click here.
Conclusion
The NJ Balanced Advantage Fund stays true to its label, "Balance hai to Behtar hai," even in today's ever-evolving market. NJ BAF assists investors in confidently navigating ups and downs with its adaptable asset allocation strategy and commitment to high-quality investments. This fund isn’t just about managing risk; it’s about capturing potential for growth while maintaining stability. Invest wisely—because balance truly leads to superior outcomes.
FAQs
1) How can I invest in NJ BAF?
Contact your Financial Advisor or Visit the following link to start your investment journey with NJ Balanced Advantage Fund.
2) Is NJ BAF good for SWP?
BAFs are suitable for long-term investment horizons hence, starting an SWP with NJ BAF can provide stable and regular cash flows to investors planning for retirement and other long-term goals.
3) NJ BAF is suited for?
NJ BAF is best suited for investors with a long-term horizon and moderate risk tolerance, as it allows the fund to weather market volatility and possibly deliver better returns over time.
Investors are requested to take advice from their financial/ tax advisor before making an investment decision.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
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