- The Fund will allocate money to equity and fixed income asset classes based on the percentage allocation suggested by theDynamic Advantage Asset Allocation Facility (DAAAF) model.
- DAAAF is a unique P/E based variation asset allocation facility, that automatically manages asset allocation across equity and debt in different market phases based on an in-house proprietary P/E based investment model. DAAAF 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 allocation to the equity allocation.
- Exit: When the equity market is overvalued i.e. Current P/E is significantly higher, it switches or decreases allocation from the equity allocation to the debt allocation.
- Re-enter: When valuations are reasonable vis-à-vis the historical averages, it switches / increases allocation to the equity allocation from the debt allocation.
At the time of initial NFO allotment, the basis on which the fund would be allocating resources is summarized in the following table:
| Variation* from Long Term average PE |
% Equity Allocation |
| Above 40% |
30% |
| Between 31% and 40% |
30% |
| Between 21% and 30% |
40% |
| Between 11% and 20% |
60% |
| Between 1% and 10% |
80% |
| Below 0% |
100% |
*PE variation is defined as the deviation of trailing PE of Nifty 50 Index ( observed on a 20 days moving average basis) from 15 year rolling average PE of Nifty 50 Index.
From the subsequent month from the date of allotment, the fund would rebalance the portfolio on monthly basis according to the following table:
| Variation* from Long Term average PE |
% move from Equity to Debt |
% move from Debt to Equity |
| Less than -20% |
|
100 % |
| Between -20% and -11% |
|
50 % |
| Between -10% and 0% |
|
10 % |
| Between 1 and 10% |
No Action |
No Action |
| Between 11 % and 30% |
No Action |
No Action |
| Between 21% and 30% |
No Action |
No Action |
| Between 31% and 40% |
50 %** |
|
| Above 40% |
100% |
|
* PE variation is defined as the deviation of trailing PE of Nifty 50 Index (observed on a 20 days moving average basis) from 15 year rolling average PE of Nifty 50 Index.
** This will be subject to the overall equity floor of 30%.
The model recommendations would come on the 1st working day of the month basis which the recommended actions needed to be taken in the portfolio will be executed within 7 working days.
The asset allocations to Equity and Fixed Income asset classes would be governed by the DAAAF Model, however, the selection of specific securities/papers in equity as well as debt will be done at the respective fund manager’s discretion. The Equity portion of the investments would be allocated in a diversified manner and the Fixed Income portion of the investments would be managed through investments in debt securities at the fund manager’s discretion.
The overall investment strategy will be in line with the investment objective and asset allocation of the scheme at all times.