Chandigarh, August 17, 2022 (News Team): Franklin Templeton (India) is launching an open-ended dynamic asset allocation fund called Franklin India Balanced Advantage Fund (FIBAF) in the Punjab market. The fund intends to generate long-term capital appreciation and income generation by investing in a dynamically managed portfolio of equity and equity related instruments and fixed income and money market instruments.
Franklin Templeton sees strong potential for growth of mutual funds in Punjab as new investors look at alternative modes of investment following declining returns from traditional assured returns products. The fund house is working on growing its distributor network in Punjab, with the aim of reaching out to more investors to educate them about the benefits of mutual fund investing. The assets under management of the mutual fund industry in Punjab currently stands at around Rs. 43 thousand crore spread across key cities like Ludhiana, Chandigarh, Jalandhar and Amritsar among others and is poised for exponential growth in the medium to long term.
FIBAF is a prudent choice for investors seeking a ‘one-stop’ solution for their investment needs as it offers tactical allocation between equity and debt based on market valuations and fundamental factors-driven views.
The product is suitable for investors who are not only keen to take advantage of the growth opportunities in equities, but also prefer to reduce the impact of market volatility. The New Fund Offer opens on August 16, 2022, and will close on August 30, 2022, during which units will be available at Rs.10/- per unit.
Speaking on the launch of the fund, Avinash Satwalekar, President, Franklin Templeton–India, said, “We are excited to bring another diversified investment offering that helps investors in Punjab navigate through changing markets, in a simple and efficient manner. We are eagerly looking forward to embarking on a new chapter of growth in India, and the launch of FIBAF represents a first of many steps to this end.
“This new fund is for investors looking for a balanced exposure to equity and debt over the longer term while also capitalizing on opportunities provided by the market from time to time. Apart from the benefits of diversification, this formula-driven approach with its in-built ‘buy-sell’ discipline helps to negate the behavioural biases caused due to emotions of greed and fear.”
Commenting on the fund launch, Anand Radhakrishnan, Managing Director and Chief Investment Officer – Emerging Markets Equity - India, Franklin Templeton, said, “Global equity markets have corrected in recent months and continue to be volatile amidst multiple headwinds of inflation, interest rate and ongoing geopolitical tensions. Indian markets have also been impacted but have held up much better compared to major developed and EM counterparts (in dollar terms). Such episodes of market volatility can push investors off-course leading them to take sub-optimal decisions. With that in mind, Franklin India Balanced Advantage Fund will adopt a flexi-cap approach for equity allocation. The scheme will endeavour to invest in high quality instruments with over 80% of fixed income portfolio in AAA-rated papers. This makes it suitable for investors looking for the best of both worlds.
“The asset allocation is derived from Franklin Templeton’s in-house proprietary dynamic asset allocation modeland an active stock selection process similar to a flexi-cap portfolio. We believe this will help improve outcomes for investors by enabling them to stay invested over longer periods.”
Speaking on the fund strategy, K Rajasa, VP and Portfolio Manager– Franklin India Balanced Advantage Fund, said, “FIBAF is a dynamically managed fund and a complete portfolio solution. The asset allocation strategy backing FIBAF has been successfully optimized for the inputs used and periodicity of asset rebalancing. The gross equity exposure is intended to be maintained between 65% and 100%. At any point, if the equity allocation falls below 65%, the gross equity exposure will be maintained using equity derivatives. Debt instruments will make up for the rest. The fund is eligible for equity taxation if the allocation to equity asset class is above 65% for the year.”
Elaborating further, she said, “We will use a combination of quantitative and qualitative factors to determine the equity asset allocation. The quantitative parameter would be based on the month-end weighted average Price to Earnings (P/E) ratio and Price to Book Value (P/BV) ratio of the Nifty 500 Index. As per the ratio bands, the corresponding equity allocation will be identified for both P/E and P/BV separately. These parameters will be accorded 50% weightage each and added to arrive at the final equity allocation. We would also overlay the quantitative parameter-based equity allocation with a qualitative assessment of various factors such as macroeconomic trends, policy backdrop, aggregate corporate fundamentals, market liquidity models etc.”
Speaking on the launch of the fund, Avinash Satwalekar, President, Franklin Templeton–India, said, “We are excited to bring another diversified investment offering that helps investors in Punjab navigate through changing markets, in a simple and efficient manner. We are eagerly looking forward to embarking on a new chapter of growth in India, and the launch of FIBAF represents a first of many steps to this end.
“This new fund is for investors looking for a balanced exposure to equity and debt over the longer term while also capitalizing on opportunities provided by the market from time to time. Apart from the benefits of diversification, this formula-driven approach with its in-built ‘buy-sell’ discipline helps to negate the behavioural biases caused due to emotions of greed and fear.”
Commenting on the fund launch, Anand Radhakrishnan, Managing Director and Chief Investment Officer – Emerging Markets Equity - India, Franklin Templeton, said, “Global equity markets have corrected in recent months and continue to be volatile amidst multiple headwinds of inflation, interest rate and ongoing geopolitical tensions. Indian markets have also been impacted but have held up much better compared to major developed and EM counterparts (in dollar terms). Such episodes of market volatility can push investors off-course leading them to take sub-optimal decisions. With that in mind, Franklin India Balanced Advantage Fund will adopt a flexi-cap approach for equity allocation. The scheme will endeavour to invest in high quality instruments with over 80% of fixed income portfolio in AAA-rated papers. This makes it suitable for investors looking for the best of both worlds.
“The asset allocation is derived from Franklin Templeton’s in-house proprietary dynamic asset allocation modeland an active stock selection process similar to a flexi-cap portfolio. We believe this will help improve outcomes for investors by enabling them to stay invested over longer periods.”
Speaking on the fund strategy, K Rajasa, VP and Portfolio Manager– Franklin India Balanced Advantage Fund, said, “FIBAF is a dynamically managed fund and a complete portfolio solution. The asset allocation strategy backing FIBAF has been successfully optimized for the inputs used and periodicity of asset rebalancing. The gross equity exposure is intended to be maintained between 65% and 100%. At any point, if the equity allocation falls below 65%, the gross equity exposure will be maintained using equity derivatives. Debt instruments will make up for the rest. The fund is eligible for equity taxation if the allocation to equity asset class is above 65% for the year.”
Elaborating further, she said, “We will use a combination of quantitative and qualitative factors to determine the equity asset allocation. The quantitative parameter would be based on the month-end weighted average Price to Earnings (P/E) ratio and Price to Book Value (P/BV) ratio of the Nifty 500 Index. As per the ratio bands, the corresponding equity allocation will be identified for both P/E and P/BV separately. These parameters will be accorded 50% weightage each and added to arrive at the final equity allocation. We would also overlay the quantitative parameter-based equity allocation with a qualitative assessment of various factors such as macroeconomic trends, policy backdrop, aggregate corporate fundamentals, market liquidity models etc.”