NFO review: LIC MF Balanced Advantage Fund

LIC Mutual Fund is all set to add another fund to its bouquet of actively managed funds. The fund will dynamically manage its asset allocation between equity, debt and money market instruments. The New Fund Offer (NFO) is open for subscription since October 20, 2021, and will close on November 03, 2021. It is managed by Yogesh Patil (Equity portion) and Rahul Singh (Debt portion) and is benchmarked against the LIC MF Hybrid Composite 50:50 Index. About the strategy Dynamic asset allocation funds juggle their asset allocation without minimum exposure limits to a particular asset class, based on the market conditions. Also, most funds use the arbitrage component so as to leverage the benefit of equity taxation. These funds endeavor to raise the allocation to equities to make use of bull runs but reduce it when the markets are trending at high levels, and valuations are expensive. This is done to limit the downside in case the markets fall after that. Although the proposition of Balanced Advantage Funds is pretty appealing, we at Value Research are usually wary of such funds. We believe that dynamically moving across debt and equi