LIC Mutual Fund announced the launch of LIC MF Balanced Advantage Fund (LICMF BAF), an open-ended Dynamic Asset Allocation Fund, which would invest across equity and debt and money market instruments using several parameters like valuation and earning drivers.
The Investment Strategy for LIC MF Balanced Advantage Fund, essentially a hybrid scheme, would be uniquely driven by "Fundamental Driven Mathematical Model".
Explaining the dynamics of this model-based unique investment approach for the new fund offer in LIC MF BAF, Dinesh Pangtey, CEO, LIC Mutual Fund Asset Management said, "Bond yields, in a way, represent the opportunity cost of investing in equities and perception of risk appetite. We at LIC MF would be using this inverse relationship between equity and debt in LICMF BAF for switching from equity to debt and vice versa, based on Fundamental Driven Mathematical Model."
LICMF BAF model would precisely use this relationship to determine optimum asset allocation level for the scheme. The model uses Interest rates, one year forward Price Earnings ratio and Earnings Yield, to arrive at the optimum asset allocation level.
The model automatically arrives at asset allocation between Equity & Debt, as the underlying fundamentals change. However, Equity & Debt portfolio shall be managed actively by seasoned fund managers, Pangtey added.
The model is designed in such a way that it automatically factors in, any change in any of the parameters, on a real time basis and keep changing the Price to Earning band using Linear Progression.
LICMF BAF would not only help investors participate in the market rally, but more importantly it would aim to minimise the downward risk, and this would be a crucial part for any investment strategy, Pangtey said.
LICMF BAF will be benchmarked against a customised index, LIC MF Hybrid Composite 50:50 Index. The index composition will be 50% Nifty 50 TRI and 50% Nifty 10 year Benchmark G-Sec.
The fund endeavours to keep gross equity allocation 65% or above to enable investor avail equity taxation Benefit.
The New Fund Offer (NFO) opens on Wednesday, October 20, 2021, and would close on Wednesday, November 3, 2021.
The fund managers for LIC MF BAF will be Yogesh Patil for Equity portion, and Rahul Singh for the Debt portion.
