LIC Mutual Fund: For the past few years, the enthusiasm among people regarding Balanced Advantage Funds has increased a lot. Through this investment can be made in Equity, Debt, Money Market. The fund will open on 20 October and close on 3 November 2021.
New Delhi. LIC Mutual Fund Asset Management Ltd, a subsidiary of the country’s largest insurance company Life Insurance Corporation (LIC), has announced the introduction of Balanced Advantage Fund. The company said that it will be an open-ended dynamic asset allocation fund. In this, investments can be made in equity, debt and money market instruments through parameters like valuation and earnings. This new fund offer (NFO) for subscription will open on 20 October and close on 3 November.
Benefit from equity taxation benefits
Yogesh Patil will be appointed as the fund manager for the equity portion of LIC MF Balanced Advantage Fund and Rahul Singh for the debt portion of LIC Mutual Fund. It is benchmarked against the customized index LIC MF Hybrid Composite 50:50 Index. In order to pass on the equity taxation benefits to investors, the fund’s target has to have a gross equity allocation of 65 per cent or more. However, in the last few years, Balanced Advantage Funds have been liked a lot by the people and there has been a boom in it.
No exit load when redeemed
Balanced advantage funds are preferred because asset management companies (AMCs) use derivatives to reduce their effective equity exposure to less than 65 per cent. At the same time, maintain the gross exposure at 65 percent or more. If an equity-oriented mutual fund is redeemed after one year, investors are charged a 10 per cent tax on capital gains above Rs 1 lakh. Redemption before one year will attract an exit load of 1 per cent, which will be a charge over 12 per cent of the allotted units. There will be no exit load after completion of 12 months from the date of allotment.
‘Will be used to switch from equity to debt’
Dinesh Pangte, CEO, LIC Mutual Fund said that bond yields, in a way, represent the opportunity cost and risk appetite of investing in equities. We will use the inverse relationship between equity and debt in Balanced Advantage Fund to switch from equity to debt.
