Fund of Fortnight
Ninad Ramdasi / 22 Sep 2022/ Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund of Fortnight, MF - DSIJ Recommendation, Mutual Fund
This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
Edelweiss Balanced Advantage Fund - Direct Plan
Reason for recommendation
Higher than expected inflation numbers both in India and the US have once again dashed the hopes of investors who thought peak inflation is behind us and its trajectory is downward now. This has once again created volatility in the equity market. In such a situation it is recommended to have a balanced advantage funds or dynamic asset allocation funds which can tweak asset allocation in line with market conditions. Such funds provide good downward protection.
Edelweiss Balanced Advantage Fund is a worthy candidate for the same from this category. Looking at its discreet calendar year returns, apart from 2016 and 2017, in the last eight years it has always been an outperformer in its category and its performance has been in the top two quartiles. In the last three years and five years it has generated return of 17 per cent and 12 per cent, respectively.
If we look at its latest asset allocation, 70.87 per cent is in equity, 22.66 per cent is in debt and 6.47 per cent is in cash. Speaking about its equity portfolio, it has invested in 88 stocks with it being overweight on the financial sector holding almost a quarter of the assets, followed by energy, technology and consumer staples. Stocks such as ICICI Bank, HDFC Bank, Reliance and Axis Bank form its top holdings.
On the fixed income side, its Macaulay duration stands at 1.57 years and average maturity is 1.72 years. This means its debt portfolio is more tilted towards shorter term papers. In a rising interest rate scenario, it will have a less impact compared to a fund holding longer duration papers. In terms of individual papers, its highest allocation is to cash equivalents and government securities. Looking at its portfolio and asset allocation, the fund is best suited for a conservative investor.
