NFO: PPFAS Mutual Fund has floated a new fund offer -- Parag Parikh Dynamic Asset Allocation Fund, which is an open-ended dynamic asset allocation fund. The new fund offer (NFO) will be available for subscription from February 20, 2024, to February 22, 2024. The scheme will be co-managed by Rajeev Thakkar, Raunak Onkar, Raj Mehta, Rukun Tarachandani and Mansi Kariya.
Parag Parikh Dynamic Asset Allocation Fund (DAAF) is the sixth scheme by PPFAS Mutual Fund. The scheme's investment objective is to generate income and long-term capital appreciation through investments in equity, equity derivatives, and fixed income instruments. The allocation between equity instruments and fixed income will be adjusted dynamically to offer investors long-term capital appreciation while managing downside risk.
Neil Parag Parikh, Chairman and CEO of PPFAS MF, said: "The fund is a unique offering which fills a gap in our product offering. Given the indexation benefit offered, investors could consider the scheme as a relatively tax-friendly option, meant for their debt allocation."
He added: "With the changes in the debt taxation laws which happened last, our conservative hybrid fund lost its indexation benefit. From now on, the conservative hybrid fund will be taxed at the full marginal rate of the investor. So, there is a clear gap in the product offering for such a product. There was a big demand from our unit holders and distribution partners of a product which will give this indexation benefit. So, our fund will give you tax benefit if you hold it for three years."
Last year, FM Nirmala Sitharaman made amendments to debt taxation. As per the changes made to the Finance Bill on March 24, 2023, profits from funds having less than 35 per cent of assets in equities are not eligible for long-term capital gains and indexation advantages. Regardless of the timing of selling these units, they are included in your income and subject to taxation at your slab rate.
Here are the top features:
1. The scheme will reopen on February 28, 2024.
2. The minimum investment in the scheme shall be Rs 5,000 and subsequent investments can be any amount thereafter.
3. The performance of the scheme will be benchmarked against the Tier I Benchmark Index – CRISIL Hybrid 50+50 Moderate Index.
4. Dynamic asset allocation funds are a type of balanced fund or hybrid fund. Most of the funds in this category are invested and spread across various sectors, including equity funds, real estate, stocks, and bonds.
5. ost of the schemes in the balanced advantage fund or dynamic asset allocation fund category are equity-oriented.
6. However, this scheme will maintain the equity allocation between 35% and 65% to avail indexation benefits.
7. No exit load will be levied for the 10% of units from the date of allotment. However, 1% load will be applicable if redeemed within one year of the date of allotment for the beyond 10% of the units.
8. No exit load will be levied if redemption is made after 1 year from the date of allotment of units.
9. Any exit load charged (net off GST, if any) shall be credited back to the scheme.
10. A dynamic asset allocation perspective implies that when a competing investment vehicle fails, the invested liquidity is typically transferred to another vessel that is delivering better results. The main advantage of these funds is their inherent dynamic nature, serving as a tool to navigate market downturns.
Best funds so far in this sector
| HDFC Balanced Advantage Fund | Fund Size: Rs 77,011 cr | Return (p.a): +25.97% |
| Baroda BNP Paribas Balanced Advantage Fund | Fund Size: Rs 3,671 cr | Return (p.a): +18.10% |
| Edelweiss Balanced Advantage Fund | Fund Size: Rs 10,349 cr | Return (p.a): +17.38% |
| Tata Balanced Advantage Fund | Fund Size: Rs 8,517 cr | Return (p.a): +16.28% |
| ICICI Prudential Balanced Advantage Fund | Fund Size: Rs 54,142 cr | Return (p.a): +15.38% |
Also read: Hybrid mutual fund schemes are slowly catching investor fancy: Should you go for it?