Kotak Mahindra’s Mutual Fund arm recently introduced a New Fund Offer called as Kotak Balanced Advantage Fund. The Balanced Advantage Fund is a dynamic asset allocation fund that enables investors with freedom from manual asset allocation of debt, equity, equity related securities, and money market instruments while managing risk through active allocation.

The investment strategy completely relies on the fund manager’s choices, which is basis the overall economic scenario, market conditions, global events or equity market evaluation interest rate factors, etc. However, this scheme doesn’t guarantee the attainment of investment objective of the fund. The investment model of this Balanced Advantage Fund is generally based on trailing NIFTY PE which means that the fund manager shall reduce the equity exposure when the valuations are high and risky, and increase the equity exposure when the valuations are low.

This scheme is most suitable for investors with long term investment plans of more than 5 years since it is equity-oriented. Before investing, the investors need to monitor and self-examine their risk appetite.

Risks involved in this scheme

Before investing in this scheme, you need to be aware of the risks involved stated below –

• Investments in mutual fund involve risks like trading volumes, liquidity risk, default risk and settlement risk
• This scheme does not guarantee or predict the future performance. Hence, before investing into this scheme, an investor needs to refer to the past performance
• The Net Asset Value of your investment bit in the scheme may fluctuate due to changes in the price of underlying asset, fluctuations in the interest rate, changes in the credit rating, settlement periods, government policies and transfer procedures
• Basis the view of the fund manager, assets are allocated between equity and debt classes in a dynamic manner. At the same time, there’s also a risk that the markets may not perform as per the anticipation.

While investing in this form of product, the investor needs to thoroughly understand the functionality in order to avoid being completely dependent on this fund for your income needs. For investors who are looking for less volatility and some stable growth, it is a good choice, especially in the times of high valuations. The returns on Kotak Balanced Advantage Fund will largely rely on how the fund managers play their strategy while working on the portfolio.