Whether markets go up or down, equity funds are mandated to hold most of their portfolio in equities. But there is one breed of funds that can hold less equity in rising markets and also a lot of cash and fixed income. These are called dynamic funds, or asset allocation funds. With equity market at 28,000 levels and its one-year price-to-equity ratio at 17 .6 (as on 3 October), Franklin India Dynamic PE Ratio Fund of Funds—the oldest dynamic fund—had 40% in equities at the end of August 2016, versus 66% in September 2013.
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