SBI Balanced Hybrid Fund: What the draft paper reveals about its equity, debt and global exposure

According to the draft Scheme Information Document (SID), “the Scheme seeks to follow a balanced and disciplined approach to asset allocation” by investing in a mix of equity and equity-related instruments and debt and money market instruments.

The scheme aims “to generate long-term capital appreciation and income by predominantly investing in equity and debt instruments”, according to the draft document.

The proposed allocation includes 40-60% of total assets in equity and equity-related instruments, including REITs, and 40-60% in debt securities, money market instruments and units of debt-oriented mutual fund schemes.

The document states that the portfolio allocation may change depending on “economic conditions, interest rates, liquidity and other relevant considerations, including the risks associated with each investment.”

Equity and debt strategy

The equity portion of the scheme will be invested in a diversified mix of companies across sectors, themes and market capitalisations.

The debt component is intended to provide “income stability, liquidity, and risk mitigation”, according to the draft document. Investments may include government securities, corporate bonds, money market instruments and other permitted fixed-income securities.

Overseas exposure

The scheme may also invest in foreign securities, including ADRs, GDRs, foreign equity, overseas ETFs and debt securities, subject to applicable SEBI and RBI regulations.

As per the draft SID, such investments “may not exceed 35% of the net assets of the scheme”.

Fund management team

The debt portion of the scheme will be managed by Rajeev Radhakrishnan. The draft document states that he is currently Chief Investment Officer – Fixed Income and Head of Research – Fixed Income at SBI Funds Management and has around 22 years of experience in fund management, including around 20 years in fixed-income fund management and dealing.

The equity portion will be managed by R. Srinivasan. According to the document, he has more than 31 years of experience in equities and has worked with various organisations in asset management and financial services.

Benchmark

The scheme will benchmark its performance against the NIFTY 50 Hybrid Composite Debt 50:50 Index.

The draft SID cautions investors that “there can be no assurance that the investment objective of the scheme will be achieved” and that the scheme “does not assure or guarantee any returns.”

The scheme may also use derivative instruments as permitted under regulations. The document notes that derivatives “are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor.”

1. SBI Equity Hybrid Fund
2. SBI Balanced Advantage Fund
3. SBI Multi Asset Allocation Fund
4. SBI Arbitrage Opportunities Fund
5. SBI Conservative Hybrid Fund
6. SBI Equity Savings Fund

Investor facilities

The scheme offers the following facilities on an ongoing basis.

• SIP: Investors can invest a fixed amount at regular intervals through Systematic Investment Plans (SIPs), with options including daily, weekly, monthly, quarterly, half-yearly and annual frequencies.
• SWP: The Systematic Withdrawal Plan allows investors to withdraw a minimum amount of ₹500 periodically through weekly, monthly, quarterly, half-yearly or annual options.
• STP: The Systematic Transfer Plan allows investors to transfer investments systematically from one scheme to another, subject to applicable SIP and SWP limits.
• MITRA SIP: This facility allows investors to begin with an SIP and, after a specified period, switch units to another scheme or continue with the same scheme and opt for SWP, based on their selected option.

What investors should know

Since SBI Balanced Hybrid Fund is a new scheme, there is no past performance record available. Investors may need to evaluate the scheme’s asset allocation, risk level, fund management approach and whether a balanced hybrid category fits their financial goals before considering an investment.