SBI Releases New Balanced Hybrid Fund to Target Moderate Risk Investors

SBI Releases New Balanced Hybrid Fund to Target Moderate Risk Investors​

SBI Mutual Fund has officially announced the launch of its new SBI Balanced Hybrid Fund, an open-ended scheme designed for investors seeking a blend of regular income and long-term capital appreciation. The fund falls under the Balanced Hybrid category, providing a structured approach to portfolio management by balancing equity market growth with the stability offered by fixed-income instruments.

Strategic Investment Objectives and Asset Allocation​

The primary investment objective of the SBI Balanced Hybrid Fund is to generate long-term capital appreciation and steady income. To achieve this, the fund invests in a diversified mix of equity and debt instruments. The scheme follows a structured asset allocation range where equity and equity-related instruments (including REITs) are maintained between 40% and 60%, while Debt Securities and Money Market Instruments are held between 40% and 60%.

The fund's strategy involves a disciplined approach to asset allocation. The equity component serves as the primary driver for capital appreciation, focusing on companies across various sectors, themes, and market capitalizations. Meanwhile, the debt portion provides income stability and liquidity, acting as a counterbalance to equity market fluctuations.

Investment Portfolio and Diversification​

The SBI Balanced Hybrid Fund adopts a wide-ranging investment mandate. It is permitted to invest in:

• Equity shares and Equity Related Instruments (including convertible debentures and warrants).
• Debt Securities and Money Market Instruments such as Certificate of Deposits, Commercial Papers, and Treasury Bills.
• Foreign Securities including ADRs/GDRs, Foreign equity, and overseas ETFs.

Regarding international exposure, the scheme may invest up to 35% of its net assets in foreign securities, with a specific cap of US $25 million in Overseas securities and US $10 million in Overseas ETFs. The fund also maintains the flexibility to invest in floating-rate debt securities to mitigate the impact of rising interest rates in the economy.

Risk Management and Derivative Strategies​

The fund employs a range of sophisticated risk mitigation strategies, including diversification and hedging. While the scheme may take exposure to derivatives for non-hedging purposes (such as covered call strategies), it remains strictly compliant with SEBI guidelines regarding equity and debt derivative limits.

For instance, the scheme may engage in stock lending where not more than 20% of net assets can be deployed in Stock Lending, with a further cap of 5% for any single counterparty. Additionally, the fund utilizes "Imperfect Hedging" using Interest Rate Futures (IRFs) and employs Covered Call strategies to generate-income while hedging against market risks.

Operational Framework and Transactional Details​

The SBI Balanced Hybrid Fund operates as an open-ended scheme, providing redemption and switch facilities on every business day at the applicable Net Asset Value (NAV). The fund offers both Direct and Regular Plans, with Growth and Income Distribution cum capital withdrawal (IDCW) options available for both.

For investors seeking systematic entries, a Systematic Investment Plan (SIP) is available for various frequencies, including Daily, Weekly, Monthly, Quarterly, Semi-Annual, and Annual. Furthermore, the AMC offers unique facilities such as "MITRA SIP" for scheduled switching to other schemes and "Swing STP" for managed transfers between funds based on specific target market values.

Fund Management and Reporting​

The scheme is managed by a seasoned team of experts:

• Mr. Rajeev Radhakrishnan (Debt Portion): A veteran with over 22 years of experience in fund management, specializing in Fixed Income.
• Mr. R. Srinivasan (Equity Portion): An expert with more than 31 years of experience in equities and public markets.

The AMC commits to full transparency by disclosing the NAV daily on the AMFI and SBI Mutual Fund websites. Furthermore, the scheme provides regular updates, including monthly portfolio disclosures, half-yearly unaudited financials, and annual reports (or abridged summaries) for all unitholders.