WhiteOak Capital Balanced Advantage Fund NFO – Issue Details, Risk Factors and Review

WhiteOak Capital Mutual Funds has launched Balanced Advantage Fund NFO that would open for subscription on 20th January, 2023. It’s an open-ended fund that invest based on dynamic asset allocation between equity and specific debt securities. When stock markets are volatile or market corrections are expected in near term, investing in balanced advantage fund could be the best bet. Should you invest in WhiteOak Capital Balanced Advantage Fund? Let me review this Balanced Advantage fund along with risk factors.

Also Read:  This Mutual Fund generated highest SIP returns in last 20 years

What is Balance Advantage Mutual Funds?

Balanced advantage fund is the dynamic asset allocation fund. Such schemes dynamically manage equity and debt part based on the market conditions. The fund manager would have their own ratios and formulas to manage such investments dynamically. When stock markets are higher or overvalued, such funds would have lower exposure in equity and vice versa.

WhiteOak Capital Balanced Advantage Fund NFO - Issue Details, Risk Factors and Review

WhiteOak Capital Balanced Advantage Fund – NFO Issue Details

Here are the NFO issue details.

Scheme Opens 20-Jan-23
Scheme Closes 03-Feb-23
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Lumpsum Rs 500
Minimum SIP Rs 500 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load Redemption within 1 month -1 %
Redemption beyond 1 month – Nil
Risk Very High Risk
Benchmark CRISIL Hybrid 50+50 – Moderate
Fund Manager Mr. Rahul Singh
Max TER 2.25%

WhiteOak Capital Balanced Advantage Fund SID

What is the investment objective of WhiteOak Capital Balanced Advantage Fund NFO?

To provide long term capital appreciation and generate income from a dynamically managed portfolio of equity & equity related instruments and debt & money market securities.

However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

What is the allocation pattern in this mutual fund scheme?

This fund investment pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equities and equity related instruments 0% 100% Very high
Debt Securities (including securitized debt)
and Money Market Instruments, cash, and
cash equivalents and / or units of domestic
liquid mutual fund schemes
0% 100% Low to Moderate

Why to invest in WhiteOak Capital Balanced Advantage Fund NFO?

Here are a few reasons to invest in this fund.

1) Balanced advantage fund invests in both equity and debt component. Hence it reduces the risk of investing in equity to some extent since it does not invest 100% in equity.

2) Balance advantage fund works on the concept of dynamic asset allocation. If the stock market is overvalued, it would reduce equity exposure. If the stock market is undervalued, such scheme would increase equity exposure. This concept helps to invest more in equity when the stock market is undervalued.

3) Balanced advantage funds have generated good returns in medium to long term even when stock markets are volatile.

Why not to invest in WhiteOak Capital Balanced Advantage Fund NFO?

One should consider some of these risk factors / negative factors before investing.

1) This scheme invests in debt instruments between 0% to 100%. Investment in debt instruments has become high risk due to downgrade of corporate credit ratings and delay in repayment of debt instruments by corporates where mutual fund schemes have invested.

2 Investments in debt instruments have interest rate risk and credit risk beyond default risk.

3) This mutual fund would invest based on stock selection and avoids focusing on macro events. There is no guarantee that such stock selection by the fund manager can generate stable returns.

4) For complete risk factors, investors can refer Scheme Information Document (SID) of the mutual fund scheme.

Performance of existing Balanced Advantage Funds

Let us look at the performance of existing balanced advantage funds. Beyond 1 year are annualised returns.

Scheme Name  1Y 3Y 5Y 10Y
HDFC Balanced Advantage Fund 13.9% 17.4% 11.7% 13.6%
Edelweiss Balanced Advantage Fund 0.3% 15.3% 11.4%
ICICI Prudential Balanced Advantage Fund 6.3% 11.9% 10.2% 12.8%
Union Balanced Advantage Fund 2.5% 11.8% 9.8%
Aditya Birla Sun Life Balanced Advantage Fund 3.0% 11.7% 9.3% 11.8%
Nippon India Balanced Advantage Fund 4.1% 11.7% 8.9% 11.9%
DSP Dynamic Asset Allocation Fund 0.0% 8.4% 8.3%
IDFC Balanced Advantage Fund -2.2% 9.4% 8.2%
HSBC Balanced Advantage Fund 1.8% 8.7% 8.0% 11.4%
Axis Balanced Advantage Fund -1.4% 9.0% 7.9%
Sundaram Balanced Advantage Fund 4.2% 10.0% 7.4% 10.0%
Sundaram Balanced Advantage Fund -10.0% 10.0% 7.4% 10.0%
Invesco India Dynamic Equity Fund 1.7% 9.3% 6.9% 12.1%
Motilal Oswal Balance Advantage Fund -1.7% 6.4% 6.2%
Bank of India Balanced Advantage Fund 13.1% 10.1% 5.5%
Kotak Balanced Advantage Fund 3.7% 11.2%
Shriram Balanced Advantage Fund 1.7% 10.2%
ITI Balanced Advantage Fund -2.6% 3.8%
Tata Balanced Advantage Fund 4.8% 13.9%
Baroda BNP Paribas Balanced Advantage Fund 2.1% 15.8%

Also Read: This Hybrid Fund generated highest SIP returns in last 5 years

Should you invest in WhiteOak Capital Balanced Advantage Fund NFO?

WhiteOak Capital Mutual Fund Balanced Advantage Fund invests in equity and debt portion. It invests dynamically based stock market conditions. Balanced advantage funds works well when stock markets are overvalued or undervalued. This segment has generated stable returns in various market conditions.

On other hand, since it invests in both equity and debt segment, one should not expect very high returns. Such funds can underperform during bull run.

If you are moderate to high risk investor, you can invest in such mutual funds. If you do not want to invest with such new NFOs, you can invest in existing balanced advantage funds for medium to long term.

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Suresh KP

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