Dynamic Equity funds are largely equity oriented funds which invest in a mix of debt and equity. They increase or decrease their allocation to equities and debt depending on their view of the stock markets. Typically, when stock markets fall they increase equity in the portfolio and when they are up they reduce it. Since the asset classes switch as per the market conditions, the fund auto-allocates it self according to the varying market trends and eliminates market timing as well as human bias during investing. A big advantage of these funds is that they are structured in such a way that they are taxed as equity funds as at least 65 per cent of the corpus is invested in Equities & arbitrage components.
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