SBI Balanced Advantage Fund: A Comprehensive Overview

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The SBI Balanced Advantage Fund is a prominent offering from SBI Mutual Fund, tailored for investors seeking a balanced approach to wealth creation. This fund dynamically manages its asset allocation between equities and fixed-income securities, adjusting to market conditions to optimize returns and manage risk effectively.

Fund Objective and Strategy

Launched on August 31, 2021, the SBI Balanced Advantage Fund aims to provide investors with long-term capital appreciation and income generation by investing in a mix of equity and debt instruments. The fund’s dynamic asset allocation strategy allows it to shift between asset classes based on market valuations, aiming to capitalize on market opportunities while mitigating risks.

Performance and Returns

As of June 2024, the SBI Balanced Advantage Fund has delivered an annualized return of 13.84% since its inception. This performance is noteworthy, considering the fund’s objective of balancing risk and return through strategic asset allocation. The fund’s NAV (Net Asset Value) stands at ₹14.4268, with an AUM (Assets Under Management) of ₹30,096 crore​

Portfolio Composition

The fund’s portfolio is diversified across various asset classes. As of May 31, 2024, the asset allocation is as follows:

  • Equity: 32.32%
  • Debt: 26.34%
  • Cash and Cash Equivalents: 37.72%
  • Real Estate: 3.62%

The equity component includes investments in high-quality stocks across sectors, while the debt portion is invested in government securities and high-credit corporate bonds to ensure stability and liquidity​ 

Fund Management

The fund is managed by a team of experienced professionals, including Dinesh Balachandran, Mansi Sajeja, Mohit Jain, Pradeep Kesavan, and Rajeev Radhakrishnan. Their combined expertise ensures a robust investment strategy that dynamically adjusts to market conditions to achieve the fund’s objectives​ ​.

Systematic Withdrawal Plan (SWP)

The SBI Balanced Advantage Fund offers a unique SWP (Systematic Withdrawal Plan) facility, providing investors with regular cash flows. This facility is more tax-effective compared to dividends, allowing investors to withdraw a fixed percentage or amount periodically. The flexibility in SWP options caters to investors’ varying cash flow needs, making it a popular choice for those seeking regular income from their investments​ 

Risk and Taxation

The fund is categorized under the ‘Moderately High’ risk level on the risk meter. This indicates that while the fund has the potential for higher returns, it also carries a commensurate level of risk. Regarding taxation, dividends are added to the investor’s income and taxed according to their respective tax slabs. If an investor’s dividend income exceeds ₹5,000 in a financial year, the fund house deducts a TDS of 10% before distribution​ 

Conclusion

The SBI Balanced Advantage Fund is an excellent choice for investors looking for a balanced investment approach that dynamically adjusts between equity and debt to optimize returns and manage risk. With its robust management team and strategic asset allocation, the fund has shown strong performance since its inception, making it a compelling option for long-term wealth creation and income generation.

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