SBI Balanced Advantage NFO gets Rs 12,000 cr, best ever among active funds

Officials in the company said they are expecting another Rs 1,000 crore as online applications will continue till midnight

SBI Balanced Advantage Fund has received the highest ever collection seen in the active funds space in its new fund offer (NFO) which closed on Wednesday. Officials in the company stated that they have received Rs 12,000 crore and are expecting another Rs 1,000 crore as online applications will continue to come till midnight.

With sharp surge in Indian equity markets and strong returns generated by the equity funds, investors have been flocking towards NFOs of MFs. Last month, ICICI Prudential Flexicap fund had received Rs 9,808 crore in its NFO. In 2017, passive fund--BHARAT 22 exchange traded fund (ETF) had received Rs 14,499 crore through its NFO, shows the data from Value Research.

“The response has been terrific from across the country. We have received flows from urban areas as well as rural areas. Approximately half of money has come in through the banking channels while other from our wide distribution network,” said a senior official from the SBI MF on condition of anonymity.  

Before ICICI Prudential’s Flexicap fund, Reliance Focused Largecap Fund and Reliance Natural Resources Fund had seen inflows of Rs 5,790 crore and 5,660 crore respectively through its NFOs.

SBI Balanced Advantage Fund is an open-ended dynamic asset allocation fund that seeks to generate long term capital appreciation by aiming to capture the potential upside and limit the downside in volatile equity markets.

The fund would manoeuvre across equity for long-term wealth creation and fixed income to provide stability to the overall scheme portfolio. Based on several parameters, such as valuations, earnings drivers, sentiment indicator, and the opportunity to generate higher alpha, the fund managers would have complete flexibility to manoeuvre across asset classes in the range of 0-100 per cent.

In the past few months there has been huge attraction towards dynamic asset allocation funds as investors fear correction in equities going forward. In the current financial year, dynamic asset allocation funds have received net inflows of over Rs 7,500 crore, shows the data from Association of Mutual Funds in India (Amfi).

These funds are also known as balanced advantage funds, and they have net assets under management of Rs 1.22 trillion as on July end. Market participants say that SBI Balanced Advantage Fund has received responses from first time retail investors as well as senior citizens.  

Few years ago, there were instances of mis-selling of balance funds as they were sold as ‘safe’ funds by the distributor fraternity. Last year's market correction had led to capital erosion prompting investors to move out from the category.

Market participants say that as long as past returns from equity funds look attractive, investors will continue to invest in NFOs of the fund houses.