Canara Robeco Mutual Fund, on Thursday, rolled out a Balanced Advantage Fund (BAF), an open-ended, dynamic asset allocation fund. The fund’s goal is to increase upside participation and generate alpha while markets are doing well and reduce downside risk during bad market periods, the firm said in a statement. The new fund offer (NFO) will open on Friday, and close on July 26.
The firm said that the gross allocation of the fund will be 65% or more towards equities, to ensure equity taxation for investors, with an aim to address the investor behavioural gap caused by market volatility.
“The asset allocation in the fund will be guided by a three-factor model, which Canara Robeco has back-tested over a 20-year period,” said Shridatta Bhandwaldar, head of equities, Canara Robeco Mutual Fund.
“The BAF is an asset allocation product which will dynamically allocate equity based on in-house model, to eliminate investor biases. The proprietary model uses Trailing P/B’, ‘Equity Risk Premium’ and Forward P/E’ to set asset allocation formulae in different market conditions,” Mr. Bhandwaldar said, while addressing a press conference in Mumbai.
The firm said that in its allocation to debt segment, the fund would largely invest in government bonds and AAA-rated corporate papers to maintain stability and liquidity. The fund would be benchmarked against the Crisil Hybrid 50+50 – Moderate Index.
