DSP BlackRock Mutual Fund has collected over Rs 476 crore during the NFO period of its recently launched open end fund of funds scheme called DSP BlackRock Dynamic Asset Allocation Fund (DAAF).
In a press release, the fund house said that DAAF has received subscriptions from over 14,100 investors.
“We are pleased with the excellent response to the DAAF NFO, especially from retail investorsfrom over 250 cities, said S. Naganath, President and CIO, DSP BlackRock. “The success of the NFO is a reflection of investor confidence in the product and in DSP BlackRock Mutual Fund”, he added.
DAAF is a first-of-its-kind scheme which would dynamically manage its asset allocation between two equity funds and two debt funds of DSP BlackRock MF based on relative valuations of equity and debt market. The equity portion will be invested in DSP BlackRock Top 100 Equity Fund and DSP BlackRock Equity Fund while the debt portion will be invested in DSP BlackRock Strategic Bond Fund and DSP BlackRock Short Term Fund.
The factors that would be used for determining the asset allocation is the Yield Gap ratio, which is the ratio of debt market yield to equity market yield. 10Y G-Sec yield is used as the proxy for debt market yield, while earnings yield of equity markets is simply the reciprocal of the Nifty Price/Earnings ratio. DSP BlackRock believes that by evaluating the ratio of these two yields, one can assess whether equity markets are overpriced or underpriced relative to debt markets.
The model also considers the Modified Yield Gap ratio, which uses 1Y G-Sec yield in the numerator.
The fund will calculate both these ratios on a daily basis. If the difference between the two ratios is greater than 0.05, the fund will use yield gap ratio and in case the difference is less than 0.05, the fund will use modified yield gap ratio.
The allotment for the DAAF NFO has been completed and the units have been allotted on February 6, 2014 to investors. The scheme will reopen for continuous sale and repurchase on February 11, 2014 at the prevailing NAV. DAAF is managed by Apoorva Shah and Dhawal Dalal.
