Many retail investors are entering the markets through the mutual fund route for the first time. In a scenario where markets are trading close to their all-time high and earnings growth has been flat for the past four years, financial planners say that instead of investing in pure equity funds, first-time investors making should enter the equity market through dynamic asset allocation funds. These funds reduce or increase their exposure to equity in the portfolio based on market valuations and are less risky or volatile compared to pure equity funds. ICICI Prudential Balanced Advantage Fund, the largest in the space with assets of Rs 22,465 crore under management, uses the price-to-book value ratio of the market, to decide its equity allocation. The equity portion is mainly invested in largecap stocks, while in the debt portfolio, the fund does take some duration calls help make the most of rate declines.

Source: Economic Times December 05, 2017 04:07 UTC