Tata Mutual Fund has launched its open ended dynamic asset allocation fund - Tata Balanced Advantage Fund. The scheme aims to provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments.
The fund will follow an in-house model to decide scheme allocation. In a press release, the fund house said, “Usually, various models are used for asset allocation like PE based model and PE + PB model. We have come up with an in-house model called the PE plus model, which would factor in other market dynamics other than intrinsic value.”
The model allows 10% variation to the basic PE based equity allocation; driven by:
• Correlation to select global markets (relevant to Indian equities)
• Implied volumes (to identify extremes – fear vs. complacency)
• Momentum indicators (price based indicators to avoid early entry/exit
in a directional market)
Rahul Singh, CIO-equities, Tata Mutual Fund said, "The basic goal of the strategy is to be able to manoeuver the investment allocation as per prevailing market conditions to make money work harder. The fund would make use of various alternative models depending upon macro, fundamental factors and fund manager outlook to determine the unhedged equity allocation."