Aditya Birla Sun Life Dual Advantage Fund – Series 2 NFO Review. Should you invest?
This is an election year, a year expected to be filled with volatility in the markets and Mutual Fund companies have geared up with offerings to suit the investment behavior of investors. To engage conservative retail investors, the fund offers high exposure in fixed income category, yet aiming to give some higher return with stock investment up-to 30%, top mutual fund companies have come up with hybrid funds in many forms.
Aditya Birla Sunlife’s new Fund offering is one such case in point. Aditya Birla Sun Life Dual Advantage Fund – Series 2 is a closed-ended Hybrid fund is highly tilted to the fixed income category.
|Mutual Fund||Aditya Birla Sun Life|
|Scheme Name||Aditya Birla Sun Life Dual Advantage Fund – Series 2|
|Objective of Scheme||The primary investment objective of the Scheme is to generate income by investing in a portfolio of fixed income securities maturing on or before the maturity of the Scheme. The secondary objective is to generate capital appreciation by investing a portion of the Scheme corpus in equity and equity related instruments. The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes’ objectives will be achieved.|
|Scheme Type||Hybrid fund|
|Scheme Category||Closed Ended fund|
|Liquidity||The Scheme will have a duration/tenure of 1180 days from and including the date of allotment. The NAV of the Scheme will be announced on every business day. No redemption or repurchase will be permitted prior to maturity of the Scheme. The Scheme will be listed on NSE / BSE and/or any other recognized stock exchanges as may be decided by AMC from time to time and the Unit holders who wish to redeem units may do so through Stock Exchanges at prevailing listed price on such Stock Exchange.|
|New Fund Launch Date||17th January 2019|
|New Fund Offer Closure Date||31st January 2019|
|Indicate Load Separately||No exit load , no entry load|
|Minimum Subscription Amount||Rs. 1,000/- and multiple of Rs. 10/-there after|
|Benchmrk||CRISIL Hybrid 75+25 – Conservative Index|
Intended portfolio allocation (Debt – 70-95%, Equity – 5-30%)
|Certificate of Deposits (CDs)||0-5%||–||–||–||–|
|Commercial Papers (CPs)||0-5%||–|
|Non-Convertible Debentures (NCDs)||–||30%-35%||25%-30%||15%-20%||–|
|Treasury Bills/ CBLO/ Reverse Repos/ Liquid Schemes||–||–||–||–||0-5%|
|Equity and Equity related securities||–||–||–||–||5%-30%|
Source – Amfi
What is a Mutual Fund NFO – A new fund offer occurs when a fund is launched, allowing the firm to raise capital for purchasing securities. Mutual funds are one of the most common new fund offerings marketed by an investment company. The initial purchasing offer for a new fund varies by the fund’s structuring.
Investment vehicle analysis – It is a debt tilted hybrid scheme, having upto 30% equity exposure.
Fixed Income Strategy: Investments in fixed income / debt investments would be made only in securities which will mature on or before the date of the maturity of the Scheme. Scheme will invest in the fixed income / debt securities with a view to hold them till the maturity. The scheme has the flexibility to invest in the entire range of debt instruments. The actual percentage of investment in various fixed income securities will be decided after Scheme Information Document considering various factors like the prevailing interest rate and inflation scenario, performance of corporate sector, general liquidity and other considerations.
Equity Strategy: The corpus of the equity component of the scheme will be primarily invested in diversified equity and equity related securities of the companies that have a potential to appreciate in the long run to achieve the market linked appreciation (upside) and premium of exchange traded options. The Scheme will primarily focus on companies that have demonstrated characteristics such as market leadership, strong financials and quality management. The quality or strength or management would be a key focus area
Fund manager details
Debt Fund manager
|Name an age||Educational Qualification||Experience|
|Mr. Mohit Sharma, Age – 38 years||PGDCM – IIM Calcutta; B Tech – IIT Madras||He has around 13 years of experience of which 10years are in financial markets. He joined Aditya Birla Sun Life AMC Ltd on October 2015. Prior to joining Aditya Birla Sun Life AMC Ltd, he ran his own healthcare- tech business (June 2012 – May 2015). He has also worked as an Interest Rates Trader in Standard Chartered Bank (May 2007 – June 2011) and ICICI Bank Ltd (June 2006 – April 2007). He started his career in the Equity Research in Irevna Ltd (June 2005 – June 2006).|
Equity Fund manager
|Name an age||Educational Qualification||Experience|
|Mr. Vineet Maloo 36 yrs B.Com.||C.A. Has around 14 years of experience in Financial services||Prior to joining ABSLAMC He had been providing analytical support to the Chief Financial Officer of Hindalco Industries Limited, prior to which he has worked with Aditya Birla Management Corporation Ltd. & M/s. D. K. Chhajer & Co., Chartered Accountants|
RISK FACTORS ASSOCIATED WITH CLOSE ENDED SCHEMES:
· A close ended scheme endeavours to achieve the capital appreciation only at the scheduled maturity of the scheme. However, there is no assurance that the said objective will be achieved at the scheduled maturity of the Scheme and there is a risk that the capital invested may not be fully realisable upon maturity of the Scheme.
· Moreover, given the uncertain nature of equity markets, the AMC may be required to liquidate the equity portfolio and the proceeds may be kept in cash and invested largely in cash equivalents/money market instruments towards the Maturity/Final Redemption date and to that extent these investments made may not be in line with the asset allocation pattern.
· Investors who wish to exit/redeem before the scheduled maturity date may do so through the stock exchange mode. For the Units listed on the exchange, it is possible that the market price at which the Units are traded may be at a discount to the NAV of such Units. Hence, Unit Holders who sell their Units in a Scheme prior to maturity may not get the NAV returns.
To invest or not – This is a retail focused fund, with a protection with high rated bonds and minimum exposure in equity. The minimum investment amount is Rs. One thousand. However, this is a closed ended fund, it means, the investors can only invest during the NFO period and exit on maturity. Investors neither can invest during the tenure nor withdraw (except demat format, one can trade depending on the liquidity). It leaves investors with no option to invest incase of a market fall or withdraw incase it has given extra ordinary return. Though the investment is for fixed tenure, it doesn’t have guaranteed return You may check https://www.amfiindia.com/new-fund-offer for FMP instruments. This is a clear NO for small and new investors. An savvy mutual fund investor can look at investing upto 10% of their cash/ fixed income portfolio in these kind of investments
There are many balanced funds like ICICI Prudential Balanced Advantage Fund, Tata Balanced Fund etc. For blocking money for a period, Fixed Maturity plans with complete debt investment may fetch bit higher return compared to fixed deposits.