Investment Objective:
The investment objective of this scheme is to generate income/long-term capital appreciation by investing in
equity, equity derivatives, fixed income instruments.
The allocation between equity instruments and fixed income will be managed dynamically so as to provide
investors with long term capital appreciation while managing
downside risk.
However, there is no assurance that the investment objective of the Scheme will be achieved and the Scheme
does not assure or guarantee any returns.
Asset Allocation:
The scheme will predominantly invest in debt instruments, while keeping the equity allocation at a minimum
of 35% for added tax advantage.
Even in the equity portion of the scheme, unhedged equity will be kept lower than 20%. This means if we do
occasionally increase equity allocation
to provide better returns, most of it will be hedged via arbitrage to lessen volatility while still aiming
for reasonably higher returns. This will also
make the Net Asset Value (NAV) of the Scheme less prone to volatility on account of fluctuations in the
equity market. In unhedged equity, preference will
be given to cash flow generating stocks (higher dividend payout/buybacks).
How is this scheme tax-friendly?
While most of us discuss mutual fund taxation in terms of equity taxation or debt taxation. There is a third
scenario – when the equity allocation is between 35%-65%.
| Taxation |
Scenario
|
|
Equity < 35%
(Debt > 65%) |
35% - 65%
Equity
(35% - 65% Debt) |
Equity > 65%
(Debt < 35%) |
| Holding Period |
NA |
24 months
|
12 months
|
| LTCG |
As per income slab rate |
12.50%
(plus applicable SC & 4% HEC)
|
12.50%
(plus applicable SC & 4% HEC)
|
| STCG |
As per income slab rate |
As per income slab rate
|
20% |
In Parag Parikh Dynamic Asset Allocation Fund, we predominantly invest in debt instruments and endeavour to
maintain equity allocation between 35% and 65%.
While the scheme has the flexibility to go up to 65% in equity, we aim to keep the equity portion at the lower
end of this range; thereby ensuring that scheme has greater debt allocation.
By keeping the allocation right next to the threshold, we keep a high debt allocation without crossing over to
the slab-rate-taxation side!
This scheme is suitable for the investors who…
Seek higher debt allocation with tax efficiency
Desire regular cash flow via fixed income instruments & cash flow generating equity
Refrain from actively trading in debt securities with the intention of profiting from interest-rate
movements
Have a medium to long-term investment horizon, looking for balanced risk and return
Want professional management of their portfolio with active decision-making based on changing market
conditions
Investors should be aware that the fiscal rules/tax laws may change and there can be no guarantee that the
current tax position may continue indefinitely.
In view of the individual nature of tax implications, investors are advised to consult their financial or
tax advisers for more details about their tax liability.
Parag Parikh Dynamic Asset Allocation Fund
An open ended dynamic asset allocation fund.
This product is suitable for investors who are seeking*
- Capital Appreciation & Income generation over medium to long term.
- Investment in equity and equity related instruments as well as debt and money market instruments while managing risk through active asset allocation
|
|
*Investors should consult their financial advisers if in doubt about whether the product is suitable
for them.
