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WhiteOak Capital Mutual Fund , a relatively new player in the Indian mutual fund industry, has introduced its latest offering, WhiteOak Capital Balanced Hybrid Fund , which is open for subscription from October 5, 2023, until October 19, 2023.
NFO snapshot
| Fund name | WhiteOak Capital Balanced Hybrid Fund |
| SEBI category | Hybrid: Balanced Hybrid |
| NFO period | October 5, 2023 to October 19, 2023 |
| Where will the scheme invest | 40-60 per cent in equity |
| 40-60 per cent in fixed-income | |
| Benchmark | CRISIL Hybrid 50+50- Moderate Index |
| Fund manager | Ramesh Mantri (Equity), Trupti Agrawal (Assistant Fund Manager), Piyush Baranwal (Debt), Shariq Merchant (Overseas Investments) |
| Exit load | 1.00% (of applicable NAV) if units are redeemed / switched-out within 1 month from the date of allotment. Nil thereafter |
| Tax treatment | Enjoys indexation benefit. If sold after 3 years: Gains are taxed at 20% after providing the indexation benefit. If sold within 3 years: Gains are added to the taxable income and taxed as per the applicable slab |
About WhiteOak Capital Balanced Hybrid Fund
This fund belongs to the 'Balanced Hybrid' category, a class of mutual funds obligated to maintain an equity allocation within the range of 40-60 per cent, similar to their fixed-income allocation.
Interestingly, this category was created by the SEBI during the recategorisation exercise in 2017, and the WhiteOak Capital Balanced Hybrid Fund is only the second fund in this category to hit the market. The first fund in this category was launched by 360 One approximately a month ago, and it was able to amass around Rs 378 crore in assets.
Why are fund houses launching balanced hybrid funds?
The answer lies in the changes brought about by the 2023 Budget, which eliminated the indexation benefit from debt funds, thereby creating a new taxation bucket. Now, a fund can enjoy the indexation benefit only if its equity allocation falls between 35 to 65 per cent. The investment mandate of balanced hybrid funds positions them perfectly to take advantage of this indexation benefit.
Previously, fund houses didn't have funds in this category because SEBI regulations allows a fund house to have a fund in either the balanced hybrid or aggressive hybrid category, but not both. Most fund houses already had funds in the aggressive hybrid category during the recategorisation, with a substantial amount of investor capital, so they opted to stick with those funds.
Now, with the indexation benefit shifting to the balanced hybrid category and simultaneously being withdrawn from debt funds, both newer entrants and fund houses without offerings in the aggressive hybrid category seem to be adding balanced hybrid funds in their product baskets.
Investment strategy of WhiteOak Capital Balanced Hybrid Fund
WhiteOak Capital Balanced Hybrid Fund adopts a balanced approach by evenly allocating 50 per cent to equity and 50 per cent to debt, with a commitment to rebalance to its strategic asset allocation of 50 per cent whenever external asset allocation limits (i.e., 40 per cent or 60 per cent) are breached due to market fluctuations.
About WhiteOak Capital Mutual Fund
WhiteOak Capital Mutual Fund, with assets totalling around Rs 5,379 crore, is a part of the WhiteOak Capital group. It became a player in the Indian mutual fund industry by acquiring Yes Bank's asset management business in 2021.
About the fund managers
The fund will be managed jointly by Ramesh Mantri, Trupti Agrawal, Piyush Baranwal, and Shariq Merchant.
Ramesh Mantri, who also serves as the Chief Investment Officer (CIO) of the fund house, will co-manage the equity portion with Trupti Agrawal. Mantri possesses over 20 years of experience in investment and cross-sector financial analysis. He has been involved in advising funds and family offices on equity investments in South Asia and managing a US-based hedge fund.
Trupti Agrawal has experience in IFRS and credit analysis.
Piyush Baranwal, who joined WhiteOak in 2018, will oversee the debt portion of the fund. He brings experience from his prior role in the fixed income division at BOI AXA Investment Managers.
Our word
Balanced hybrid funds which aim to maintain 50/50 asset allocation strategy are products of wide appeal to risk averse investors. However, so far, these funds have not picked up in India for the reasons mentioned above, but other kinds of funds which maintain a similar asset allocation, like retirement solution products, have delivered returns of 11.66 per cent, 8.91 per cent, and 9.93 per cent over the last one year, five years, and 10 years, respectively.
We would like to closely monitor the performance of this fund. However, at this moment, we have chosen to observe from the sidelines, which is consistent with our stance on all new fund offers (NFOs).
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