[on-hold music] Hi. So when you think about the SBI Balanced Advantage Fund, it is essentially a hybrid fund that has allocation across both equity and fixed income. In terms of how we manage this fund, right now, the, the fund is essentially run on the basis of an in-house proprietary framework, which has three main pillars:

valuations, sentiment, and earnings outlook. Within valuations, we essentially look at both equity and fixed income and try to sort of compare them against each other. The one key modification that we have made here is that we want to think about equity from a cyclically adjusted perspective, which means that we want to think about economic cycles when we talk about equity valuations. Uh, so we compare equity, uh, valuations with fixed income valuations, and that gives us a sense, uh, regarding which, uh, which asset class looks more attractive at any given point in time.

What we've seen for effective asset allocation is that valuations are important, but you need something on top of valuations to make the asset allocation more optimal, and this is where sentiments come into the picture. So we have an in-house sentiment index that measures various factors with regards to flows, with regards to macro variables, with regards to sort of internals of the equity market, and so on. And in essence, it is essentially trying to tell us whether investors overall are very positive or negative with respect to the equity market. And for us, the sentiment act-acts as a mean reverting, contrarian kind of indicator, where when investors are very, uh, optimistic, we want to err on the side of caution, and when investors are very pessimistic, we want to, uh, be a lot more aggressive with respect to our equity allocation. And then earnings outlook is a, a short-term overlay that we have to see whether, uh, the outlook is likely to surprise positively or negatively at the margin. So we combine valuations, sentiments and the, uh, near-term earnings outlook, uh, essentially arrive at a, a, a specific allocation with regards to equity and fixed income. So that is how we manage the SBI Balanced Advantage Fund. The fund as such has leeway to go all the way from zero to hundred percent in equities, and, uh, it, it essentially can, uh, invest in either equity or fixed income. Right now, when we look at the equity versus fixed income allocation, right now, the framework is asking us to be cautious with regards to equity markets because valuations are quite high, and hence the current allocation to equity is around thirty percent, uh, with the, uh, remaining allocation to, uh, either fixed income or arbitrage, which one can think of as a, a cash proxy, essentially. So clearly, we are sort of quite conservative at this point with regards to our allocation towards equity markets, and this is primarily on account of the fact that valuations have become very elevated and sentiments are also quite high. And, uh, from that perspective, we would want to be conservative at this point in time.

When I think about the, the outlook,

the fund has just completed three years. The returns that we've delivered in this fund have been quite satisfactory because for us, the objective, number one objective, is essentially to give returns better than FD, uh, like instruments, taking on some risk, but being very mindful of drawdowns. So that is something that's been very key for us, that we should minimize the drawdown. Thankfully, when we think about the last three year performance, the drawdowns have been very well controlled in the fund, and the fund has delivered returns much better than, uh, uh, FD-like instruments. Um, while we don't have a perfect crystal ball to gaze into the future, the endeavor is going to be the same, that over any rolling three-year period, we want to outperform FD in a meaningful fashion without, without taking on too much risk. And I think that endeavor is something that we think we should still be able to do going forward. So we continue to, uh, like this fund, particularly with regards to people who are risk conscious, who want to take some risks so that they get returns better than FD instruments, but do not want to go all the way, uh, towards pure equity funds. So this fund is somewhere between FD and a pure equity fund, and, uh, the idea is to sort of give returns much better than FD with volatility much lower than what one might see in a pure equity fund.

Thank you.

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