Update

Franklin India Dynamic Asset Allocation Fund of Funds (FIDAAF)


The mood is good with a no-stress fund. Franklin India Dynamic Asset Allocation Fund Of Funds (FIDAAF) changes its Equity and Debt allocation based on equity market movements. So that you don't have the stress of asset allocation and equity market swings don't affect your mood.

FUND OF FUNDS STRUCTURE

FIDAAF

Primary Funds

Franklin India Equity Fund (FIEF)

Franklin India Short Term Income Plan (FISTIP)

Equity Funds

Debt Funds

If the proportion of FIDAAF in the primary funds reaches 20% incremental allocation will be done to the secondary funds.

Secondary Funds

Franklin India Bluechip Fund (FIBCF)

Franklin India Low Duration Fund (FILDF)

Equity Funds

Debt Funds

IDEAL INVESTMENT HORIZON

The recommended investment horizon is 5 years and above

ASSET ALLOCATION STRATEGY

  • Based on average of the P/E and P/B ratio.
  • Equity allocation range corresponding to P/E and P/B ratio is predefined.
  • Fund manager decides the equity allocation percentage corresponding to the predefined range
  • Resultant equity allocation will be as per the average of both PE and PB

WHY INVEST IN FRANKLIN INDIA DYNAMIC ASSET ALLOCATION FUND OF FUNDS (FIDAAF) ?

  • Fund of fund scheme which invests in a dynamically balanced portfolio of equity and income fund of Franklin Templeton Mutual Fund (FTMF)
  • Unique in-built "buy-sell" discipline based on *Price-to-Earnings (PE)* and *Price-to-Book (PB)* level of the Nifty 500 Index which gives less room for subjectivity
  • Suitable for those who are not only keen to take advantage of the growth opportunities in equities but also prefer to reduce the impact of market volatility

KEY BENEFITS

  • - Strategic allocation to both equity and debt
  • - Increases equity exposure when the NSE 500 is undervalued and vice versa, basis weighted average PE and PB ratio of the NSE 500 index
  • - Investment discipline enforced through monthly re-balancing

WHAT ARE THE “TAX BENEFITS” OF INVESTING IN THIS FUND ?

  • Long term capital gains (LTCG) tax @20% (plus surcharge, if applicable and cess) with indexation if units held for more than 36 months
  • Short term capital gains (STCG) tax at the income tax slab rate if units are held for less than 36 months
  • Investor does not pay any tax on dividends but a Dividend Distribution Tax (DDT) is deducted at source @29.12% (25% + 12% surcharge + 4% Health & education cess) for individuals and @34.944% (30% + 125 surcharge+ 4% Health & education cess) for any other person
  • In case of an investor being NRI, LTCG tax are chargeable @10% (plus surcharge, if applicable and cess) without indexation relating to units redeemed from unlisted schemes
  • The DDT is to be paid by the Mutual Fund after grossing-up income distributed to the investor

The scheme has undergone a fundamental attribute change and has been renamed from Franklin India Dynamic PE Ratio Fund of Funds with effect from October 21, 2019

Under normal circumstances, investment range would be as follows

If weighted average PE ratio of NSE 500 index falls in this band… …the equity component will be…(%) …and the debt component will be …(%)
Upto 12 80 - 85 15 - 20
12 – 16 67.5 - 80 20 - 32.5
16 – 20 55 - 67.5 32.5 - 45
20 – 24 42.5 - 55 45 - 57.5
24 – 28 30 - 42.5 57.5 - 70
Above 28 20 - 30 70 - 80
If weighted average PB ratio of the Index falls in this band… …the equity component will be…(%) …and the debt component will be …(%)
Upto 2 80 - 85 15 - 20
Upto 2 63 - 80 20 - 37
3 – 4 47 - 63 37 - 53
4 – 5 30 - 47 53 - 70
Above 5 20 - 30 70 - 80
  • Let's say P/E is 16 and P/B is 13, as per the above table, P/E equity allocation is between 67.5 - 80 and P/B equity allocation is between 63 - 80.
  • Let's say that the fund manager takes 67.5 for P/E and 63 for P/B. The overall equity allocation will be average of 67.5 and 63. That is 65.25
  • Similarly let's say P/E is 14 and P/B is 2.5, as per the above table, P/E equity allocation is between 67.5 - 80 an P/B equity allocation is between 63 - 80.
  • Let's say that the fund manager takes 75 for P/E and 70 for P/B. The resultant equity allocation will be average of 75 and 70. That is 72.5

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