Quant Dynamic Asset Allocation Fund NFO – Issue Details, Risk Factors and Review

Quant Mutual Funds has launched Dynamic Asset Allocation Fund NFO that would open for subscription on 23rd March, 2023. It’s an open-ended fund that invests in equity and debt instruments while managing risk through active asset allocation. These funds would dynamically allocate assets which would invest high in equity when stock markets are undervalued and invest low when they are overvalued. Should you invest in Quant Dynamic Asset Allocation Fund? Let me review this Dynamic Asset Allocation Fund along with risk factors.

What is Dynamic Asset Allocation Fund?

Dynamic Asset Allocation Fund is also called as balanced advantage fund. These funds dynamically manage equity and debt part based on the market conditions. The fund manager would have their own ratios and formulas to manage such investments dynamically. When stock markets are higher or overvalued, such funds would have lower exposure in equity and vice versa.

Quant Dynamic Asset Allocation Fund NFO - Issue Details, Risk Factors and Review

Quant Dynamic Asset Allocation Fund – NFO Issue Details

Here are the NFO issue details.

Scheme Opens 23-Mar-23
Scheme Closes 06-Apr-23
Scheme reopens for continuous purchase/sale Within 5 business days
Minimum Lumpsum Rs 5000
Minimum SIP Rs 1,000 for 12 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load Nil
Risk Very High
Benchmark CRISIL Hybrid 50+50 Moderate Index
Fund Manager Sandeep Tandon | Ankit Pande
Sanjeev Sharma | Vasav Sahgal
Max TER 2.00%

What is the investment objective of Quant Dynamic Asset Allocation Fund?

The primary investment objective of the scheme is to provide capital appreciation by investing in equity and equity related instruments including derivatives and debt and money market instruments.

However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

What is the allocation pattern in this mutual fund scheme?

This fund investment pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equity & Equity related instruments 0% 100% Very High
Debt and Money Market Instruments, including Units of Debt oriented mutual fund schemes 0% 100% Very High
Foreign securities including ADRs / GDRs / Foreign equity and debt securities 0% 35% Very High

Performance of existing Dynamic Asset Allocation Funds

Let us look at the performance of existing Dynamic Asset Allocation Funds.

Scheme Name 3 Yrs 5 Yrs 10 Yrs
HDFC Balanced Advantage Fund 29.3% 12.9% 15.5%
Edelweiss Balanced Advantage Fund 18.5% 12.0% 12.2%
HDFC Dynamic PE Ratio FoF 21.9% 10.9% 10.8%
ICICI Prudential Balanced Advantage Fund 19.6% 10.4% 13.2%
Sundaram Balanced Advantage Fund 15.9% 10.2% 12.0%
Union Balanced Advantage Fund 18.2% 10.1% NA
Nippon India Balanced Advantage Fund 17.0% 10.0% 12.6%
Aditya Birla Sun Life Balanced Advantage Fund 18.5% 9.7% 12.0%
Franklin India Dynamic Asset Allocation Fund of Funds 18.2% 9.2% 10.9%
Bandhan Balanced Advantage Fund 15.0% 8.4% NA
DSP Dynamic Asset Allocation Fund 12.1% 8.2% NA
HSBC Balanced Advantage Fund 13.3% 7.9% 12.0%
Axis Balanced Advantage Fund 12.3% 7.9% NA
Invesco India Dynamic Equity Fund 15.3% 7.3% 12.2%
UTI Unit Linked Insurance Plan 13.1% 6.2% 8.8%
Motilal Oswal Balance Advantage Fund 9.7% 5.5% NA
Bank of India Balanced Advantage Fund 12.0% 5.1% NA

Why to invest in Quant Dynamic Asset Allocation Fund NFO?

Here are a few reasons to invest in this fund.

1) Dynamic Asset Allocation Fund invests in both equity and debt component. Hence it reduces the risk of investing in equity to some extent.

2) Balance advantage fund works on the concept of dynamic asset allocation. If the stock market is overvalued, it would reduce equity exposure. If the stock market is undervalued, such scheme would increase equity exposure. This concept helps to invest more in equity when the stock market is undervalued.

3) Dynamic Asset Allocation Funds have generated 8% to 15% annualised returns in the long term even when stock markets are volatile.

Major risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) This scheme invests in debt instruments between 0% to 100%. Investment in debt instruments has become a high risk due to downgrade of corporate credit ratings and delay in repayment of debt instruments by corporates where mutual fund schemes have invested.

2) Investments in debt instruments have default risk beyond interest rate risk and credit risk.

3) This mutual fund would invest in foreign securities where there is country risk and currency exchange rate risk.

4) For complete risk factors, investors can refer Scheme Information Document (SID) of the mutual fund scheme.

Should you invest in Quant Dynamic Asset Allocation Fund NFO?

Quant Dynamic Asset Allocation Fund invests in equity and debt instruments. It invests dynamically based stock market conditions. Dynamic Asset Allocation Funds work well when stock markets are overvalued or undervalued. This segment has generated stable returns in various market conditions.

On the other hand, since it invests in both equity and debt segment, one should not expect very high returns. Such funds can underperform during the bull run. Since it also invests in foreign securities, there are country risk and currency exchange risks too.

While Quant Dynamic Asset Allocation Fund One Pager document indicates that this fund is suitable for “risk averse investors”, however such funds fall under “very high” risk category and the same is indicated in Quant Dynamic Asset Allocation Fund NFO prospectus filed with SEBI. Hence, investors should not carry away with such one pager statements.

If you are a moderate to high-risk investor, you can invest in such mutual funds. If you do not want to invest with such new NFOs, you can invest in existing Dynamic Asset Allocation Funds for a medium to long term.

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Suresh KP


  1. Hi Suresh

    Heard that Investment in mutual fund (where not more than 35% is invested in equity shares of Indian company) will now deemed to be short-term capital gains. This applies to investments made on or after April 1,2023.

    It *means that debt & other non equity mutual funds (held for more than 3 years) Would not get indexation benefit nor will be eligible for 20% tax rate.*

    Please could you confirm and elaborate with simple examples which MF will be affected and should we shift ?

  2. How come only HDFC Balanced Advantage Fund generated a CAGR return of 29.3% over a 3-year period which is an outlier whereas all other funds, roughly, gave similar returns in a broad band. What was/is so special about HDFC Balanced Advantage Fund.

    1. It is the discretion of the fund manager to think whether the market are over valued or under valued. HDFC Balanced Adv Fund has always been outperforming in this segment.

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