ICICI Prudential's Balanced Advantage Fund has increased its equity allocation to 61.9%, the highest in nearly five years, signaling increased comfort with market valuations after a recent sell-off. This dynamic strategy allows managers to adjust between equity and debt based on market conditions, aiming to benefit investors who prefer automated asset allocation.

ICICI Pru Balanced Fund raises equity allocation to 5-year high

Synopsis

ICICI Prudential's Balanced Advantage Fund has increased its equity allocation to 61.9%, the highest in nearly five years, signaling increased comfort with market valuations after a recent sell-off. This dynamic strategy allows managers to adjust between equity and debt based on market conditions, aiming to benefit investors who prefer automated asset allocation.

ICICI Prudential's Balanced Advantage Fund raised its equity allocation to 61.9% as of March 31-its highest equity exposure in nearly five years.

The scheme, the second-largest in its category with assets of ₹71,150 crore as of February 2026 and co-managed by CIO S Naren, is among the most dynamically run funds in the segment. The higher equity exposure signals growing comfort with valuations following the recent market sell-off.

"Based on our valuation and sentiment indicators turning more favourable, we believe this is an appropriate time for investors to increase their allocation to equities gradually," says S Naren, ED and CIO, ICICI Prudential AMC.

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Balanced Advantage Funds allow fund managers to alternate between debt and equity, based on market levels. When stock valuations are considered expensive, exposure to equities is cut and vice versa.

The net equity exposure varies between 30% and 80%, with the balance being invested in a mix of arbitrage and debt. Total equity allocation is kept above 65%, allowing it to be taxed as an equity product.

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The last time equity allocation was higher than current levels was in June 2020, when it stood at 67.7%. Its highest stock holding in recent years was 73.7%, just around the end of the market sell-off triggered by the onset of Covid.

For calendar year 2025, the scheme maintained an average equity exposure of 45.66%, compared with 36.5% in 2024.

"The dynamic allocation across equity and debt across cycles based on valuations works well for investors who cannot manage asset allocation on their own," says Viral Bhatt, founder, Money Mantra.

Naren is sceptical, comparing the current increase in equity exposure to that in 2020

"Unlike 2020, return expectations should be more moderate given the global uncertainties, and investors should use asset allocation funds to navigate volatility," he said.

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