Fixed Deposits are popular in India. But currently the FD interest rates are at an all-time low (SBI – 4.9%) and investors are looking for better alternatives. In our previous post, we had looked at ‘Guaranteed Plans’ as an alternative. Today, we will explore another option – Dynamic Asset Allocation Funds; a sub-category within Balanced Funds.
The Fund aims to generate better than bank returns while cushioning the investor from the shocks of the stock market. The Funds increase or decrease their allocation to the equity markets on a regular basis. It is based on the Fund Manager’s perception about the market movement - will it rise or see a correction. The allocation is usually between Debt instruments and Equity markets.
Ideal horizon for this category of Fund is 3 - 5 years for risk-free returns. It is suitable for first-time Mutual Fund investors. A tax efficient monthly income can be generated through Systematic Withdrawal Plan (SWP). Average returns has been around 10% CAGR over a period of 5 years in this category.
Augustine Mendez
Chief Service Officer, Freedom Factory.
NISM-Series- V-A certified MFD,
IRDA certified Life and Health Insurance advisor
www.freedomfactory.in
Very good insights.I as satisfied customer wish Augustin and freedom factory team a successful journey ahead.