Dynamic Asset Allocation

About

A Dynamic Asset Allocation Fund (DAAF) — a subtype of hybrid/balanced advantage fund — is a mutual fund scheme that actively adjusts the mix of equity and debt assets based on market conditions and valuation signals. Fund managers increase equity exposure when markets look attractive and reduce it in favour of debt when markets look expensive or risky. This dynamic strategy aims to balance growth and risk, unlike static fixed-ratio hybrid funds.

Fund Type

Hybrid

Key Features

Market-Driven Allocation: Adjusts equity/debt mix based on valuations, economic indicators, and market conditions.

Professional Active Management: Fund managers use models and signals to rebalance portfolios dynamically.

Potential Downside Protection: By reducing equity exposure in over-valued markets, the fund aims to manage downside risk.

Tax Efficiency: Many funds maintain sufficient equity allocation to qualify for favourable equity-oriented tax treatment.

Taxation

STCG

Holding Period ≤ 12 months, 20% Tax on Gain

LTCG

Holding Period > 12 months, 12.5% Tax on Gain

Dividends Tax

As Per Income tax slab rates, TDS of 10% may be deducted by the fund house if dividend income exceeds ₹5,000 in a financial year.

Exemption Limit

1.25 Lakh on LTCG in financial year

Indexation

No Indexation

Allocation

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Equity and Equity Instruments

0% – 100%

Debt Instruments

0% – 100%

There is no fixed SEBI ratio like in other hybrid funds; allocation varies dynamically.

Locked in Period

Nill

Exit Load

Some schemes might charge an exit load of 0 – 1% if units are redeemed within 1 year. However, the exact structure may vary based on the specific scheme.

Risk Associated

If Equity Allocation ≥ 65%

Find the funds

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully before investing. Past performance is not indicative of future performance.