What will be the best mutual funds over the next 3 years, with a moderate risk in the market?

 

One of the best strategies to deploy in markets and one which comes with moderate risk is Dynamic Asset Allocation Funds.

Asset Allocation Funds or Dynamic Asset Allocation funds are best to invest in a market for people looking for Moderate Risk.

How Do Dynamic Asset Allocation Funds Work?

Simply put Dynamic Asset Allocation funds work on the principal of “Invest more in Equity when the Markets are low and Invest less in Equity when the markets are high”.

1.)    These funds change their Debt to Equity Asset allocation accordingly.

For example, at a stage of markets these funds could have Debt: Equity ratio as 60:40 and if markets correct (go lower) then it can change to 30:70.

All this is done by the fund manager themselves based on an index which tracks the expensiveness of the markets. The index and corresponding Debt : Equity Allocation could be like this. (please note that this illustration is from an indicative stand point only)

2.) Apart from the fact that you will buy more equity when markets are down, another distinctive advantage is that these funds book profits automatically for you. Once the markets start moving up, the fund managers sell equity and buy more debt and hence it results in profit booking for the investors.

3.) These funds come with equity taxation and the long term capital gains tax are zero. Many of these funds use Equity arbitrage as a strategy to ensure that they remain in the 65% zone for Equity + Equity Arbitrage to get Equity funds taxation.

We have created a Portfolio of the two best Dynamic Asset Allocation fundsavailable in the market. You can start SIP or do a lump sum investment in these funds anytime.

But mind you that these funds are basically conservative in nature and may not give very good returns vis a vis the sensex

Regards

www.rajivfcs.weebly.com

Rajiv Kapoor

Practicing Company Secretary

Kanpur

9839034761