Nov 042016
 

ICICI Prudential Balanced Advantage Fund

A rational investor prepares himself for high risk always. Having said that I must say they keep searching for the plans that involve lower risk yet earns high return. When we talk about capital formation we often choose the risky projects because high risky projects have the maximum chance to gain lump sum capital. But if this does not happen (as it is a risky plan) then the investor may face the all time biggest fall. But ICICI has come up with something easy and with minimum risk that an investor can enjoy high yielding in future.

ICICI Prudential Balanced Advantage Fund

ICICI has launched a new investment plans for those who are not in favour of risky projects. The Dynamic Asset Allocation mechanism is something that helps the investor to allocate their capital according to market volatility and also the mechanism will take care of their long term allocation that won’t get affected by short-term market ups and downs.

Dynamic Asset Allocation Mechanism

Generally by dynamic asset allocation we mean a combine investment plan. In this mechanism the investor invests in specific assets for long period of time. Under this mechanism the investors are required to maintain the invested portion by selling and purchasing parts of assets time to time.

ICICI prudential has brought an investment plan that will help the investors to maintain their portion of capital even if there are unpleasant market fluctuations.

ICICI Prudential Balanced Advantage Fund

  • ICICI Prudential Balanced Advantage Fund (BAF) is the new investment functioning strategy by the company has come up in the market. The plan has some features. They are:
  • It is an open ended equity fund plan. The minimum application amount will be Rs. 5000/-. Additionally Re. 1/- in multiples will be charged along with the application amount.
  • There is another additional amount for the application. The minimum additional application amount is Rs. 1000/- plus in multiples of Re. 1/-. The redemption amount will be Rs. 500/-.
  • The monthly instalment will be Rs. 1000/- with 5 PDCs (post dated cheques) need to be paid to the organisation for the future investments. If you choose for quarterly investment plan then the amount will be Rs. 5000/- with 4 PDCs.

What to expect from the plan?

  • The plan will yield compounded yearly return of 15% which is more than CRISIL that is 10%. Also if you compare BAF with conventional FD then the result will be hopeful as well. FD gives you return of 9% per year when BAF is providing 10.8% minimum or it can be 16.2% or 18.3%. This is surely a good result for any risk-averse investor today.
  • Because it is a long term plan so you can easily save bulk tax here. The short-term investments allow you to bear 15% tax yearly which is missing here.
  • The plan is suitable for every market as well. If you are in wealthy market then it creates enough capital for you and if you are witnessing a downfall then it restricts the limits as well.

Reasons to give it a try

  • The first and foremost reason to go for it is the rate of return this plan is offering. It also beats the benchmark set by CRISIL in 2015 of 10%. On the contrary to CRISIL BAF is offering 15% annual return which is definitely a boon to consider.
  • Secondly it promises you to buy in low rate and sell them to high rate. According to the BAF they have price to book value that helps your plan to shift from equity to debt. This leads to high return and of course chances of high selling price will get increased.
  • This plan is swift and can be called a substitute for typical saving accounts. You can withdraw money as per your requirement. In a certain interval you can enjoy your capital generated from BAF.
  • To balance the portfolio there are large as well as mid cap stocks include in this plan. This balances the losses incur in the portfolio. Also it has steady dividend record since last 3-4 years. This definitely signifies a good investment record.

Cons of the plan

  • It is a long term plan. If you are ready to block your money for long time then this plan can be considered otherwise you must not jump into this.
  • In case of auto withdrawal like saving accounts I must tell you one thing here. You need to choose a frequency plan before heading towards the BAF. Whatever frequency plan you will choose you can take out money accordingly unlike saving account from where you can take out your money anytime.

BAF – quick details

Name ICICI Prudential Balanced Advantage Fund
Type Open ended equity fund
Application amount 5000/- + 1/- multiples (min)
Additional application amount 1000/- + 1/- multiples (min)
Redemption amount 500/- (min)
Entry Load Nil
Exit load (20% units for 18 months from allocation)

(more than 20% for 18 months from allocation)

More than 18 months

Nil

1% of application NAV

Nil

Monthly instalments 1000/- + 5 PDC
Quarterly instalments 5000/- + 4 PDC
Annual return 15%
Market type Any

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