Want to invest for a few months? Want to invest for a year or two? Mutual fund advisors, it seems, have found an ideal product for all your investment needs: dynamic asset allocation funds. Cashing on the marketing push by fund houses, mutual fund advisors are recommending dynamic asset allocation funds in a big way these days, especially for short-term investment needs. It is puzzling because these schemes have sizeable investments in stocks.
Dynamic asset allocation funds invest in a mix of stocks, arbitrage and debt instruments based on the market conditions. These scheme rebalances their portfolios regularly based on in-house parameters.