Bandhan Balanced Advantage Fund Changes Asset Allocation Model; What it Means for you?

What's new with Bandhan Balanced Advantage Fund? Its asset allocation model has changed. How will this affect your portfolio? Read the article for in-depth information.

Bandhan Balanced Advantage Fund Changes Asset Allocation Model

Bandhan Balanced Advantage Fund (BBAF) is making a significant change to its asset allocation model, and it's time to take notice. Moving away from relying exclusively on the Nifty 50s PE ratio, BBAF will now consider multiple factors to determine its equity exposure. This dynamic scheme, managed by Bandhan Mutual Fund, aims to strike a balance between stocks and bonds based on the relative attractiveness of each asset class. With the deadline for investors to withdraw if they disagree with this change approaching on August 11, it's crucial to understand the implications. Read on to discover how this shift could impact your investments and whether you should be worried.


  • BBAF changes asset allocation model

  • Nifty 50 PE ratio no longer used

  • Multi-factor quantitative model adopted

  • Scheme features remain unchanged


Also ReadIDFC Mutual Fund becomes Bandhan Mutual Fund in a rebranding strategy  

The change in the asset allocation model by Bandhan Balanced Advantage Fund (BBAF) is a positive development for investors. By transitioning to a multi-factor quantitative model, BBAF aims to enhance the robustness of its investment decisions. This shift will enable BBAF to optimise equity exposure and potentially generate better returns for investors.

What’s has changed at BBAF?

Bandhan Balanced Advantage Fund (BBAF) is a dynamic asset allocation scheme that manages assets worth Rs 2,402 crore. Currently, it uses a quantitative model based on the Nifty 50s PE ratio to determine equity allocation. However, the fund house plans to switch to a multi-factor quantitative model. This new model will consider valuations, fundamental factors like macroeconomic indicators, and technical factors like market volatility. The aim is to increase equity exposure during cheaper market conditions and reduce it during expensive times.

What necessitated this change?

Fund houses commonly utilise multi-factor models to determine the allocation between debt and equity. Bandhan AMC's decision to adopt a multi-factor model for equity allocation is not unique in the industry. According to Sirshendu Basu, Head-Product at Bandhan AMC, while the existing model is straightforward, incorporating additional factors such as market volatility, risk appetite, currency movement, and fundamental indicators will enhance its robustness. This shift aims to capitalise on opportunities based on valuation, fundamental, and technical parameters.

Are features of the scheme also changing?

The scheme features do not change except for the quantitative model. The net equity allocation can go down to 30 per cent. But the scheme will keep the average gross equity allocation at 65 per cent by taking arbitrage trades. The scheme is still an equity fund for taxation purpose. The same fund managers manage the scheme.

Also ReadBandhan Mutual Fund announces Financial Services Fund, NFO opens on July 10

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax advice.

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