NFO Review: Franklin India Balanced Advantage Fund

When an investor desires to take low risk on investment with high probability of getting the returns on investment, then Balanced Advantage Funds are a great option.

Gourav Bidlans   /   August 24, 2022
Franklin India Balanced Advantage Fund

Balanced Advantage funds are hybrid mutual funds which are also known as Dynamic Asset Allocation Funds. In a Balanced Advantage fund, the asset allocation between the two asset classes – equity and debt – is managed dynamically depending on the prevailing stock market conditions.

Franklin Templeton Mutual Fund has launched a new fund offer (NFO) named Franklin India Balanced Advantage Fund. It is an open ended fund that invests in dynamically managed portfolio of equity & equity related securities, fixed income and money market instruments.

The NFO subscription date started from August 16th 2022 and will close on August 30th before it opens up for purchase and redemption.

The fund is ideal in a situation where the market has run up quite a bit and volatility is expected. “The fund is suitable for those who are not only keen to take advantage of the growth opportunities in equities, but also prefer to reduce the impact of market volatility,” a note from Franklin Templeton says.

Why diversification is important

Diversification is a process in which investor allocate its investment in multiple type of asset classes, by doing this the investor can reduce the risk and also increases the chance of gaining profit from other asset classes.

Every investor wants to gain profit on their investment and no Asset class can continue to outperform or underperform, so the Diversification is important.

Franklin India Balanced Advantage Fund key benefits-

  1. Managing volatility: As we know that market is highly volatile in short run a good fund should allocate and hedge investment, Franklin India Balanced Advantage Fund allocates its fund from Equity to Debt.
  2. Potential Growth: Equity has more growth potential then Debt, so there is high potential fund to grow, Franklin India Balanced Advantage Fund has Net Long equity exposure.
  3. Tax Efficiency: Equity-oriented fund taxation (when allocation to gross equity is => 65%)

Why Franklin India Balanced Advantage Fund

  1. Allocation strategy: In-house proprietary asset allocation model with a healthy mix of qualitative (fundamentals) and quantitative (valuation) parameters.
  2. Established track record of 25 years in managing Hybrid funds that follow stated fund mandates.
  3. Well-experienced portfolio management team with an average industry experience of over 20 years

Scheme objective:

Franklin India Balanced Advantage Fund seeks to generate long-term capital appreciation and income generation by investing in a dynamically managed portfolio of equity & equity related instruments and fixed income and money market instruments.

So, the scheme is very promising, dynamically managing portfolio makes investment safer which is important when our investment is more in Equity, scheme allows to redeem 10% of units without any exit load within 1 year after allotment.

Details of Franklin India Balanced Advantage Fund:-

  1. Asset Allocation
  • Equity – 0 to 100%
  • Fixed Income – 0 to 100%
  • Gross equity exposure endeavoured to be held at a minimum of 65%
  • Monthly rebalancing
  1. Minimum Amount

Subscription: Fresh Purchase – Rs.5,000/-. Additional Purchase – Rs.1,000/-. Redemption: Rs.1,000/-. The amount for subscription and redemption in excess of the minimum amount specified above is any amount in multiple of Re. 1/-.

  1. Benchmark

Nifty 50 Hybrid Composite Debt 50:50 Index

  1. Exit Load
  • Upto 10% of the Units may be redeemed without any exit load within 1 year from the date of allotment.
  • Any redemption in excess of the above limit shall be subject to the following exit load:

‒ 1.00% – if redeemed on or before 1 year from the date of allotment

‒ Nil – if redeemed after 1 year from the date of allotment

What are the tax implications of investing in this fund?

  • The fund is eligible to be taxed as an equity-oriented scheme if the annual average of allocation to listed domestic equity shares is minimum 65% of total AUM. As per asset allocation specified, scheme can invest 0-100% in equity and debt respectively.
  • Long term capital gains (LTCG) tax @10% (plus surcharge, if applicable and cess) without indexation if units held for more than 12 months
  • Short term capital gains (STCG) tax @ 15% (plus surcharge, if applicable and cess) if units are held for less than 12 months
  • Income distribution cum capital withdrawal (IDCW) shall be taxable in the hands of investors and the mutual fund will deduct TDS @10% for resident investors and @20% (plus applicable surcharge and cess) for non-resident investors before payouts/re-investment. However, investors can claim tax-credit of TDS deducted at the time of filing their annual return.

What is the “Ideal Investment Horizon” while investing in this fund?

The recommended investment horizon is “1 year or more”.


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