The Nippon India Balanced Advantage Fund aims to strike a balance between equities and debt through dynamic asset allocation, catering to investors seeking stability with moderate returns.
On the other hand, the Nippon India Growth Fund focuses on long-term capital appreciation by primarily investing in mid-cap stocks, suited for investors with a higher risk appetite and a penchant for aggressive growth opportunities.
Investment Strategy
Nippon India Balanced Advantage Fund
- Strategy: Dynamic Asset Allocation
- Adjusts equity-debt mix based on market conditions to optimise returns.
- Asset Allocation:
- 67.15% in domestic equities, with a breakdown of 45.76% in Large Cap, 7.68% in Mid Cap, and 1.32% in Small Cap.
- 24.08% in debt, comprising 8.05% in Government securities and 16.03% in Low-Risk securities.
Nippon India Growth Fund
- Strategy: Mid-Cap Focus
- Primarily invests in mid-cap stocks to capitalise on growth opportunities over the long term.
- Asset Allocation:
- 99.38% in domestic equities, with a significant allocation of 51.6% in mid-cap stocks, 13.98% in large-cap stocks, and 11.75% in small-cap stocks.
Growth and Returns Analysis
Nippon India Balanced Advantage Fund
- 1-Year Return: 21.77%
- 3-Year Return: 39.80%
- 5-Year Return: 72.44%
Nippon India Growth Fund
- 1-Year Return: 51.45%
- 3-Year Return: 106.45%
- 5-Year Return: 211.01%
The Nippon India Growth Fund has significantly outperformed the Balanced Advantage Fund across all time horizons, demonstrating its aggressive growth-oriented strategy.
While the Balanced Advantage Fund offers steady returns with lower risk, the Growth Fund exhibits superior growth potential, especially over the long term.
Portfolio Composition
Nippon India Balanced Advantage Fund
- Equity Allocation: 67.15%
- Large Cap: 45.76%
- Mid Cap: 7.68%
- Small Cap: 1.32%
- Debt Allocation: 24.08%
- Government Securities: 8.05%
- Low Risk Securities: 16.03%
Nippon India Growth Fund
- Equity Allocation: 99.38%
- Large Cap: 13.98%
- Mid Cap: 51.6%
- Small Cap: 11.75%
- Debt Allocation: 0%
The Balanced Advantage Fund maintains a balanced approach with significant allocations to both equities and debt, offering stability and downside protection. In contrast, the Growth Fund is heavily skewed towards equities, especially mid-cap stocks, reflecting its aggressive growth strategy with higher potential returns but also higher volatility.
Risk Analysis
Nippon India Balanced Advantage Fund
- Standard Deviation: Low (6.24)
- Beta: Low (0.86)
- Sharpe Ratio: Better (0.78)
- Treynor’s Ratio: Better (0.06)
- Jensen’s Alpha: Better (1.18)
Nippon India Growth Fund
- Standard Deviation: High (14.81)
- Beta: High (0.92)
- Sharpe Ratio: Better (1.31)
- Treynor’s Ratio: Better (0.21)
- Jensen’s Alpha: Better (2.8)
The Balanced Advantage Fund exhibits lower volatility and beta, indicating lower risk than the Growth Fund. However, the Growth Fund delivers better risk-adjusted returns, as evidenced by higher Sharpe and Treynor’s ratios, and superior Jensen’s Alpha.
Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be considered investment advice or a recommendation to invest in any particular mutual fund or asset class. Past performance does not indicate future results, and investors should research and consult with a financial advisor before making investment decisions. Investing in mutual funds involves risks, including the possible loss of principal invested.
