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ADVANTAGE YOU.

Manage market’s ups and downs intelligently with

PGIM INDIA

DYNAMIC ADVANTAGE
asset allocation facility

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Successful Investing is pretty simple -

Buy Low And Sell High

But it is easier said than done. Most investors fail to sell at high prices as they fall prey to market euphoria, and when it comes to buying low, fear grips their minds.

What If You Could Manage The Market Volatility

& Also Optimize Your Returns With Ease?

Dynamic Advantage Asset Allocation Facility is a unique P/E based equity investment facility that helps you to automatically manage your asset allocation across equity and debt in different market phases based on an in-house proprietary P/E based investment model.

Why Should An Investor Consider This Facility

Single Point Solution

Offers a balanced and bundled investment solution over debt and equity

No market timing

It helps in emotion-free investing and avoids the need to time the market.

Rules based Asset Allocation

Allocates investments to equity funds based on the relative attractiveness of equity markets vis-a-vis long term valuation trends.

Rebalancing Investments

Rebalances the portfolio to limit the downside during market downturns and run-ups.

A Solution for Every Investor

Suitable for investors looking at long-term wealth creation, irrespective of market conditions.

Helps to Manage Volatility Effectively

It limits downside risk and maximizes returns potential by timely asset allocation

How does it Work?

The Dynamic Advantage Asset Allocation facility manages allocation across equity and debt based on the market valuations and P/E based model & executes three critical strategies:

Enter

When the equity market is undervalued i.e. Current P/E is significantly lower, it switches or increases allocation from the debt fund to the equity fund.

ENTER
Variation* from long
term average PE
% Equity
Allocation
Above 40% 0%
Between 31% to 40% 0%
Between 21% to 30% 40%
Between 11% to 20% 60%
Between 1% to 10% 80%
Between -10% to 0% 100%
Between -20% to -11% 100%
Less than -20% 100%
Exit

When the equity market is overvalued i.e. Current P/E is significantly higher, it switches or decreases allocation from the equity to the debt fund.

Re-enter

When valuations are reasonable vis-à-vis the historical averages, it switches / increases allocation to the equity fund from the debt fund.

EXIT + RE-ENTER
Variation* from long
term average PE
Asset Allocation -
Move from Equity to Debt
Asset Allocation -
Move from Debt to Equity
Above 40% 100% -
Between 31% to 40% 50% -
Between 21% to 30% - -
Between 11% to 20% - -
Between 1% to 10% - -
Between -10% to 0% - 10%
Between -20% to -11% - 10%
Less than -20% - 100%

*P/E variation is defined as the deviation of trailing PE of Nifty 50 Index (observed on a 20 days moving average basis) from Long-Term Average PE of Nifty 50 Index

The Dynamic Advantage Asset Allocation facility is a P/E (Price Earning ratio) variation based asset allocation facility with rebalancing features. The Facility would help the investors in making investments in equity and debt/liquid schemes of PGIM India Mutual Fund (‘the Fund’) based on an asset allocation suggested by a proprietary model developed by the AMC and rebalance the same.

For fresh allocations it will auto allocate higher amounts to equity when the market is undervalued i.e. current P/E of Nifty is significantly lower and vice a versa.Similarly for existing allocations it switches allocation from the chosen debt fund to the chosen equity fund when P/E is significantly lower than the historical average. For e.g. *P/E variation less than -20% it will switch 100% money to equity.

As the market moves up and valuation increases it will shift money out of equity in stages. For e.g. as P/E variation crosses 30% it will switch 50% allocation from equity to debt and 100% to debt beyond 40% PE . Subsequently if market corrects, the facility will re - allocate to equity on the basis of defined P/E variation bands.

Simulating The Dynamic Advantage Asset Allocation Model

Methodology

  • Asset allocation is done on the basis of the Dynamic Advantage Asset Allocation model.1

  • The equity market/component is represented by Nifty 50 Index.2

  • The balance allocation (i.e. portfolio value minus equity allocation) is considered as debt component.3

  • Debt component returns is considered at 6% per annum for the calculation purpose.4

  • Any allocation into or out of equity is carried out on the first working day of the month.5

  • Variation is defined as the deviation of 20 day Average trailing P/E of Nifty 50 Index as at the month-end, compared with its Long-Term Average P/E (i.e. from 1st Jan 1999)6

How Can You Invest?

01

The initial investment has to be made in a Receptor Fund – PGIM India Ultra Short Term Fund, which is currently a no load fund.

02

You will have the option to choose the schemes i.e. one scheme each in Equity and Debt category for allocation* of the money parked in the Receptor fund.

03

Further, based on the P/E variations, PGIM India Dynamic Advantage Asset Allocation would re-balance* the portfolio as and when such events occur. 

How Does It Win Over Other P/E Based Models ?

The Dynamic Advantage Asset Allocation P/E model considers the deviation range of the current P/E* from its long-term averages to decide the asset allocation across equity and debt.

Fixed valuation based P/E Model considers fixed predefined historic PC band to decide the asset allocation across equity and debt.

It considers past as ell as latest data to determine the long term average period.

It uses past P/E bands that are not updated since it’s launch.

Thus, the Dynamic Asset Allocation P/E model is an efficient and dynamic model.

Let’s See How It Has Performed?

Data Source: NIFTY 50 Index, Market Data and Internal Calculations. The above graph and table are intended for illustration purpose only. To help understand the performance of the equity market, represented by the index NIFTY 50 Index, data has been analysed on a rolling basis (monthly for 5/7 years) from January 1999 to December 2018 based on the various bands of P/E variation. P/E variation is defined as the deviation of trailing PE of NIFTY 50 Index (observation on a 20 days moving average basis) from Long -Term Average PE of NIFTY 50 Index. Past performance may or may not be sustained in the future. The returns illustrated above using the P/E strategy is based on the allocation & methodology.


Power your returns & manage market volatility with ease. Accelerate your journey to wealth creation over the long-run!

PGIM India Ultra Short Term Fund (An open ended ultra-short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 months to 6 months)

This product is suitable for investors who are seeking*:

  • Income over the short term
  • Investment in short term debt and money market instruments
  • Degree of risk – MODERATELY LOW.

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer -

The information contained herein is provided by PGIM India Asset Management Private Limited. (Erstwhile Pramerica Asset Managers Private Limited (the AMC) on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. However, the AMC cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. There can be no assurance that any forecast made herein will be actually realized. These materials do not take into account individual investor’s objectives,his or her own professional investment / tax advisor / consultant for advice in this regard. These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.

Services & Products Limited (IISL) and its affiliates. IISL and its affiliates do not make any representation or warranty, express or implied (including warranties of merchantability or fitness for particular purpose or use) to the owners of Dynamic Advantage Asset Allocation Facility or any member of the public regarding the advisability of investing in securities generally or in the Dynamic Advantage Asset Allocation Facility linked to Nifty 50 Index or particularly in the ability of the Nifty 50 Index to track general stock market performance in India. Please read the full Disclaimers in relation to Nifty 50 Index in the Scheme Information Document.

Distribution of these materials to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of these materials, in whole or in part without the prior consent of the AMC, is prohibited.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

© 2019 Prudential Financial, Inc. (PFI) and its related entities. PFI of the United States is not affiliated with Prudential plc, a company incorporated in the United Kingdom. The PGIM logo and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide.

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