Samco Dynamic Asset Allocation Fund NFO – Introduction
Samco Mutual Funds has launched Dynamic Asset Allocation Fund NFO. This NFO will begin recruiting on December 7, 2023 and will close on December 21, 2023. After the initial recruitment period, the Fund will resume further recruitment after his 5th business day. This article provides details, investment objectives, positive aspects, risk factors, and reviews of Samco Dynamic Asset Allocation Fund NFO issue.
Also read: Top-performing large-cap funds over the past five years through 2023
Samco Dynamic Asset Allocation Fund NFO – Date and Issuance Details
| Fund name | Samco Dynamic Asset Allocation Fund |
| NFO is open | December 7, 2023 |
| NFO closing | December 21, 2023 |
| Scheme re-opened for continued purchase/sale | Within 5 business days |
| Minimum application amount | 5,000 rupees, thereafter in multiples of 1 rupee |
| Minimum SIP | 1,000 rupees in 6 months |
| Fund NAV | 10 rupees during NFO period. |
| entry road | Nothing |
| End of loading | For units exceeding 25% of the invested amount, 1% will be charged for redemption within 12 months |
| danger | very high risk |
| standard | NIFTY 50 Hybrid Combined Debt 50:50 Index |
| fund manager | Pallas Mataria |
Samco Dynamic Asset Allocation Fund NFO – Investment Objective
The scheme’s investment objective is to generate income and long-term capital growth by investing in equities, equity derivatives, bonds and foreign securities. The allocation between equity instruments and fixed income is dynamically managed to provide investors with long-term capital growth while managing downside risk.
However, there is no guarantee that the plan’s investment objectives will be achieved.
Samco Dynamic Asset Allocation Fund – Built on the Transformer Model
The Fund indicates that it invests based on a transformer model consisting of:
Stocks – Trend Models – Identify market stages and invest based on accumulation, uptrends, distribution, and downtrends.
Debt – EDMO Model – The EDMO model suggests that if a company’s equity is considered a good investment, its debt is also worth considering. In some cases, if a particular company’s debt has a higher yield, assuming other factors such as credit rating and the fundamental soundness of the stock are equal, this means investing in such instruments with a higher yield. It’s an opportunity.
Debt and Arbitrage – To achieve equity tax, your average total equity exposure over the past 12 months must be 65%. If you are exiting stocks in a bear market or at the top of the market, and there is a risk of equity tax, the decision will likely be to mandate total equity exposure by taking arbitrage trades. Once the forced equity exposure is addressed, debt and arbitrage will be selected based on optimal yield. Strive to achieve equity taxation and otherwise optimize debt or arbitrage according to asset risk and return.
Samco Dynamic Asset Allocation Fund NFO – Allocation Details
| Type of instrument | minimum% | maximum% | risk profile |
|---|---|---|---|
| Stock-related products including stocks and derivatives | 0% | 100% | very expensive |
| Debt and financial market instruments, including units in debt-oriented mutual fund schemes | 0% | twenty five% | low to moderate |
Samco DAAF Model: Backtest and Benchmark Comparison
Samco’s presentation shows how to back test the Samco DAAF model against benchmarks with one-year and three-year rolling returns.
Performance of existing dynamic asset allocation funds
The annualized returns for the Dynamic Asset Allocation Fund are:
| scheme name | 3 years | 5 years | 10 years |
|---|---|---|---|
| HDFC Balanced Advantage Fund | 27% | 18% | 17% |
| Baroda BNP Paribas Balanced Advantage Fund | 14% | 16% | – |
| Edelweiss Balanced Advantage Fund | 14% | 14% | 13% |
| ICICI Prudential Balanced Advantage Fund | 14% | 13% | 13% |
| Kotak Balanced Advantage Fund | 12% | 12% | – |
| Japan India Balanced Advantage Fund | 14% | 12% | 13% |
| Aditya Birla Sun Life Balanced Advantage Fund | 12% | 12% | 13% |
| Union Balanced Advantage Fund | Ten% | 12% | – |
| Motilal Oswal Balanced Advantage Fund | 12% | 11% | – |
| Invesco India Balanced Advantage Fund | 13% | 11% | 13% |
| Bandhan Balanced Advantage Fund | 11% | 11% | – |
| Axis Balanced Advantage Fund | 12% | Ten% | – |
| HSBC Balanced Advantage Fund | Ten% | Ten% | 13% |
| DSP Dynamic Asset Allocation Fund | 9% | Ten% | – |
| Sundaram Balanced Advantage Fund | 11% | 9% | 11% |
| Indian Bank Balanced Advantage Fund | 13% | 8% | – |
Samco Dynamic Asset Allocation Fund NFO – Positive aspects
The potential benefits of investing in a Dynamic Asset Allocation Fund (DAA) include:
- crisis management: DAA funds aim to manage risk by dynamically adjusting allocations to different asset classes. This flexibility allows fund managers to manage overall portfolio risk by reducing exposure to riskier assets and increasing exposure to potentially safer assets during market downturns.
- Adaptability to market conditions: These funds have the ability to adapt to changing market conditions. If a fund manager expects the market to be bullish, it may increase its exposure to equities, and if it expects the market to be bearish, it may reduce its exposure to equities and increase its allocation to bonds and other defensive assets. there is.
- Profitability potential: The ability to flexibly move between asset classes based on market conditions can provide opportunities to improve returns. DAA funds seek to take advantage of changing market trends to take advantage of potential opportunities for capital appreciation.
- Active management: DAA funds involve active management, where the fund manager continuously analyzes market trends, economic indicators, and other factors to make strategic asset allocation decisions. This active approach aims to outperform passive investment strategies in a variety of market conditions.
- Diversification: These funds typically invest in a mix of asset classes such as stocks, bonds, and cash equivalents. Diversification helps spread risk across different types of assets and reduces the impact of poor performance in a single asset class.
- Inflation hedge: Depending on the Fund’s strategy, it may provide a hedge against inflation by investing in assets that have historically shown resilience in inflationary environments, such as equities and real assets.
Also read: Best Balanced Advantage Mutual Funds of 2024
Samco Dynamic Asset Allocation Fund NFO – Risk Factors
- Market risk: DAA Funds are subject to general market fluctuations, and the Fund’s performance may be affected by changes in the stock and debt markets. Dynamic adjustment of asset allocation does not necessarily result in positive returns, especially when market conditions are volatile.
- Manager risks: The success of a DAA fund is highly dependent on the expertise and decision-making of the fund manager. Poor management decision-making or a lack of effective risk management can have an adverse impact on our bottom line. Changes in Fund management create uncertainty and may affect the Fund’s performance.
- Interest rate risk: DAA funds with exposure to fixed income securities are exposed to interest rate risk. Changes in interest rates can affect the value of existing bonds and affect the Fund’s overall returns.
- Model and strategy risks: DAA funds often rely on quantitative models and algorithms for asset allocation. Inaccuracies or failures in these models can lead to suboptimal investment decisions.
- Market timing risks: The success of dynamic asset allocation depends on the fund manager’s ability to accurately time the market, which is inherently difficult. Incorrect market timing decisions can result in losses.
Investors should take the following steps: Samco Dynamic Asset Allocation Fund NFO Prospectus against complete risk factors
Samco Dynamic Asset Allocation Fund NFO – Conclusion and Review
Investing in Samco Dynamic Asset Allocation (DAA) Funds NFO provides benefits through a strategic approach to portfolio management that dynamically adjusts asset allocation based on market conditions. This flexibility enables effective risk management and potentially increases returns.
However, the risks of Dynamic Asset Allocation Funds include market volatility and the potential for loss, which can affect the effectiveness of adjustments. The fund manager’s expertise is very important and poses a risk to the manager. Additionally, changes in interest rates may affect our business results.
Historically, such funds have shown annualized returns in the range of 11% to 17% over the past decade. It is important for investors to remember that past performance is not indicative of future results.
Investors who understand these risk factors can consider investing in such funds from a medium- to long-term perspective.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
