AGENDA

Current Behavioral Aspects Balanced Advantage Why Balanced

Environment in Market Fund Advantage Fund?

Balanced Advantage Fund

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 Balanced Advantage Fund
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Looking ahead: expect VUCA to be the theme

Uncertain

Volatile
V
C U
A Ambiguous

Complex

Balanced Advantage Fund

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Looking ahead: expect VUCA to be the theme

Possible Accelerators Possible Breaks

Surge in Markets seen as
liquidity richly valued

Progress of Federal Reserve (US) tapering of

COVID Vaccination monetary stimulus

Govt. action to spur Slower than expected

economic recovery economy recovery

In light of the above forces, markets will continue to remain volatile

Balanced Advantage Fund

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Changing narratives in a volatile market

GoI Announced Unlocking

NIFTY 50 INDEX
• Markets drop
• Global central banks unleash
>30%
unprecedented stimulus
• Global economies
• No of cases increase and fall as
shutting down
economies restart
• Total lockdown
• Some sectors badly affected,
US elections looming

• Low interest rates continue

• Economic revival across sectors
• Vaccination progress
• Multiple waves/ variants of COVID

Market recovered in a period characterized by high volatility Balanced Advantage Fund

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Equity has run up, yet relatively
decently placed

8.00
25.00 P/ E RATIO (NIFTY) EARNING YIELD – BOND YIELD
7.00
6.00
20.00
5.00
4.00

Percentage
15.00
3.00

10.00 2.00
1.00

5.00 -
(1.00)
- (2.00)

Oct-06

Oct-08

Oct-10

Oct-12

Oct-14

Oct-16

Oct-18

Oct-20
Feb-06

Feb-08

Feb-10

Feb-12

Feb-14

Feb-16

Feb-18

Feb-20
Jun-05

Jun-07

Jun-09

Jun-11

Jun-13

Jun-15

Jun-17

Jun-19

Jun-21
Jun-12

Jun-21
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11

Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20

*2 year forward data Source: Motilal Oswal

Hence, staying in Equities, with dynamic allocation seems a good approach Balanced Advantage Fund
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 Equity returns are not evenly spread out

BSE Sensex

2013-21
60000
148% absolute
50000 2008-13 returns on Sensex
1% absolute return
2003-08
40000 on Sensex
559% absolute
30000 return on Sensex

20000

10000

Phase 1 Phase 2 Phase 3

Begin End %Return Begin End %Return Begin End % Return
Apr-03 Jan-08 Jan-08 Oct-13 Oct-13 Jun-21

BSE Sensex 3168 20873 559 20873 21165 1 21165 52483 148
Balanced Advantage Fund
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 Asset class wise outperformance

Year Nifty 50 TRI CRISIL Composite Bond Fund Index Top Performer
2008 -51.3% 9.1% Debt
2009 77.6% 3.5% Equity Higher equity
2010 19.2% 5.0% Equity allocation
2011 -23.8% 6.9% Debt Debt
outperforms
2012 29.4% 9.4% Equity
2013 8.1% 3.8% Equity
2014 32.9% 14.3% Equity
2015 -3.0% 8.6% Debt Debt allocation should be
2016 4.4% 12.9% Debt higher
2017 30.3% 4.7% Equity
2018 4.6 % 5.9 % Debt
2019 13.5 % 10.7 % Equity
Equity allocation needed
2020 16.1 % 12.3 % Equity to be higher
2021* 12.74 % 1.19 % Equity

*- as on 31st July 2021 Source: Bloomberg Balanced Advantage Fund

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 Balanced Advantage Fund
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 Market behaviour (types and phases)

Complacency / Euphoria Fear/Pain

(Increasing P/E & High (Low P/E & High Volatility)

Volatility)

Optimistic Uncertainty

(Flat market & Low Volatility) (Low P/E & Low Volatility)

Balanced Advantage Fund

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 Market behaviour (Practical approach)

Nifty Index Earnings yield - Bond yield

18,000 8.00

16,000 6.00

Complacency 4.00
14,000 Complacency
2.00

(Percentage)
12,000
-
10,000
(2.00)
8,000
(4.00)
Panic
6,000 Uncertainty Panic (6.00)
Fear
4,000 (8.00)
Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21

Source: Motilal Oswal

Balanced Advantage Fund
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 Balanced Advantage Fund
Strictly for internal circulation, should not be further circulated / used for general presentation to a prospect /general public
Balanced Advantage Fund - positioning

Equity
High Small/Mid Cap
Equity Multi
Cap
Equity
Large Cap

Balance
RETURN

Advantage
Conservative Fund
Hybrid
Medium
Duration
Short
Duration
Liquid
Low
RISK High

Balanced Advantage Fund

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 Balanced Advantage Fund – Asset allocation

DEBT

Min: 10%
EQUITY
Max: 35%
Min: 65%
Max: 90%

BSE 200 CRISIL Composite Bond Index

70% 30%

Balanced Advantage Fund

Strictly for internal circulation, should not be further circulated / used for general presentation to a prospect /general public
 Flexible equity allocation: between 65% and 90%

Nifty Index Earnings yield - Bond yield EQ EQ

18,000 8.00

16,000 6.00

Fed tightening, Covid, Expensive 4.00

14,000 Expensive
2.00

(Percentage)
12,000
-
10,000
(2.00)
8,000 Demon priced in (4.00)

6,000 Sharp correction, (6.00)

Market Attractive
Massive QE starts
post correction
4,000 (8.00)
Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21

“Be fearful when others are greedy, and greedy when others are fearful”
- Warren Buffett Balanced Advantage Fund
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 Strategy

Bottom-up in-house
research would lay the
foundation for
stock selection

Large & Mid Cap DEBT Mix of sovereign and top

focused portfolio. rated corporate bonds
EQUITY

Small-cap allocation to
be done appropriately to
Enhance returns as and
when opportunity arises

Balanced Advantage Fund

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 Balanced Advantage Fund
Strictly for internal circulation, should not be further circulated / used for general presentation to a prospect /general public
 Hybrid funds in MFs - An Overview

HYBRID FUND CATEGORY

MF AUM:
₹1,40,000 Crs
MF AUM:
₹1,20,000 Crs Strategy
MF AUM:
₹20,000 Crs MF AUM:
₹16,000 Crs

Aggressive Hybrid Dynamic Asset

Allocation Balanced Hybrid Conservative
65% - 80%
30% - 100% 50% Hybrid
Equity Exposure
Equity Exposure Equity Exposure 25%
Balanced Advantage Equity Exposure
Fund To Be Positioned
Here

Balanced Advantage Fund

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 Why Balanced Advantage Fund ?

Salient features of the fund category

Familiar and well Suitable for investors Strategy

Allows equity investors Has flexible equity
established category to get equity exposure to navigate expensive allocation too but…
With reduced volatility markets, with relative ease

Difference From Dynamic

Asset Allocation Category

More equity Simpler asset

oriented allocation mix

Balanced Advantage Fund

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 Aggressive hybrid funds - better downside
protection

Large cap-category average Aggressive hybrid-category average

0

-10

-20
(Percentage)

-30

-40

-50

-60
2000 2001 2008 2011 2020*

*Data as on Mar. 2020 Balanced Advantage Fund

Strictly for internal circulation, should not be further circulated / used for general presentation to a prospect /general public
 With healthy past returns

5 Year Rolling Return 7 Year Rolling Return

BSE-200 Aggressive Hybrid MF BSE-200 Aggressive Hybrid MF

25.0 25.0

20.0 20.0

(Percentage)
(Percentage)

15.0 15.0

10.0 10.0

5.0 5.0

0.0 0.0

Aug-14

Aug-15

Aug-16

Aug-17

Aug-19

Aug-20
Aug-18
Apr-14

Dec-14
Apr-15

Dec-15
Apr-16

Dec-16
Apr-17

Dec-17
Apr-18

Dec-18
Apr-19

Dec-19
Apr-20

Dec-20
Apr-21
Aug-14

Aug-15

Aug-16
Dec-16

Aug-17

Aug-18

Aug-19

Aug-20
Apr-20
Apr-14

Dec-14
Apr-15

Dec-15
Apr-16

Apr-17

Dec-17
Apr-18

Dec-18
Apr-19

Dec-19

Dec-20
Apr-21
Source: Motilal Oswal Research, Value Research

Data is for the largest 6 Aggressive Hybrid MF schemes, covering ~75% of

the category AUM Only for internal circulation, for illustrative purposes Balanced Advantage Fund
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 Summary

Helps navigate volatile Gives equity participation,

equity markets, with hence decent returns
relative ease

Tax efficient
Familiar and well
characteristics
established category

Balanced Advantage Fund

Strictly for internal circulation, should not be further circulated / used for general presentation to a prospect /general public
 Thank You

Balanced Advantage Fund

Strictly for internal circulation, should not be further circulated / used for general presentation to a prospect /general public