Well-rounded with a dash of mid-cap flavour

40-50% of the equity portfolio is large caps and the rest is mid-and-small-caps, says SBI Magnum Balanced Fund, Fund Manager, R Srinivasan.

What is your asset allocation policy / strategy? Do you try to surrogate equity with arbitrage positions?
Normally, we run a fixed 75:25 equity-debt allocation. No, we do not surrogate equity with arbitrage positions.

What is your approach to managing the equity portfolio of this fund?
40-50% of the equity portfolio is large caps (defined as the top 100 companies on market cap rank) and the rest is mid-and-small-caps. We also run a minimum benchmark coverage (against the BSE 500) of 25%.

What is your approach to managing the fixed income portfolio of this fund?
Certain portion (around 40% - 50%) of the debt fund is deployed in high yielding credits (minimum rating of A-) with an aim to provide stability and increase the overall portfolio yield. The balance is managed more dynamically having exposure to government bonds and liquid AAA rated credits while keeping in mind the overall view on interest rates.

How often do you re-balance your debt and equity allocation?
It is a fixed 75:25 allocation so balancing is practically a daily affair. A maximum of 7.5% cash (and equivalents) is allowed within the equity component which is at the equity fund manager's discretion.

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This article was originally published on May 24, 2016.