SBI Balanced Advantage Fund NFO collects Rs.13,000 crore

It looks like the SBI MF Balanced Advantage Fund NFO may go down as the largest garnering of funds among MFs. Just a month back, ICICI Prudential Flexi Cap NFO had garnered Rs.9,800 crore and that was a record then. Now it looks like SBI MF has beaten that by a margin collecting close to Rs.13,000 crore as per early estimates.

SBI Balanced Advantage Fund is an allocation fund. The mix of equity and debt will be flexible. The way such allocation funds work is that as the index level goes higher, the fund automatically reallocates more to debt. At the same time, as markets become cheaper, the allocation to equity is automatically increased. This ensures that the fund is programmed to take profits at higher levels and has liquidity at lower levels of the market.

To an extent, this NFO underlines the advantage of the bancassurance model in the mutual fund business. Today if you look at the top-7 funds by AUM, 5 of them are part of large banking group. In the of SBI Balanced Advantage Fund NFO, it is estimated that Nearly 45% of the collections came through the SBI branch channel. It is reported that out of the 24,000 branches of SBI, nearly 14,000 branches got inflows for the NFO. 

Also Read: Flexi Cap NFOs are the in-thing among mutual funds

One of the unique features of the SBI Balanced Advantage Fund is that it offers a unique percentage withdrawal facility. Under this facility, investors can either opt to withdraw 0.5% of the invested amount each month or 3% every 6 months or 6% each year. The catch is that if the fund is not able to deliver that kind of returns, then the amount will be paid out of the investor’s capital.
The company is expected to have received a total of 4 lakh applications, which would mean a fairly large number of big ticket applications in the NFO.