LIC Mutual Fund today launched LIC MF Balanced Advantage Fund (“LICMF BAF”), an open-ended Dynamic Asset Allocation Fund, which would invest across equity and debt & money market instruments using several parameters like valuation and earning drivers.
The Investment Strategy for LIC MF Balanced Advantage Fund, essentially a hybrid scheme, would be uniquely driven by “Fundamental Driven Mathematical Model”.
Dinesh Pangtey, CEO, LIC Mutual Fund Asset Management Ltd said: “Bond yields, in a way, represent the opportunity cost of investing in equities and perception of risk appetite. We at LIC MF would be using this inverse relationship between equity and debt in LICMF BAF for switching from equity to debt and vice versa, based on Fundamental Driven Mathematical Model.”
LICMF BAF model uses Interest rates, one year forward Price Earnings ratio and Earnings Yield, to arrive at the optimum asset allocation level.
The model automatically arrives at asset allocation between Equity & Debt, as the underlying fundamentals change. However, Equity & Debt portfolio shall be managed actively by seasoned fund managers, Pangtey added.