One of the leading life insurance companies in India, Bajaj Allianz Life has launched a unique fund proposition in the ULIP segment on September 01, 2023. Bajaj Allianz Life’s Dynamic Asset Allocation Fund offers customers the opportunity to allocate between equity and debt, dynamically.
The benchmark index is the Crisil Dynamic Asset Allocation Index (45 per cent equity, 45 per cent debt, and 10 per cent liquid). The NFO period for the Dynamic Asset Allocation fund ends on September 25, 2023.
The asset allocation (between debt and equity) of the fund will be more dynamic/active in nature. It is based on an in-house quantitative model with limited qualitative input from the fund manager and aims to optimize risk return. This investment strategy will help to minimize volatility and downside risk during market corrections.
For example, in a scenario, when market valuations get more expensive, the fund will reduce equity exposure. Alternatively, with more attractive market valuations, it will increase equity exposure. The asset allocation range of the fund will be as follows:
- Equity and equity-related instruments: 10-90%;
- Debt and debt-related instruments: 10-90%;
- Money market instrument: 0-80 %.
At the launch, Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance said, “Having been a part of the industry for over three decades, I have observed that a common challenge retail investors face is managing asset allocation independently, depending on changing market conditions or outlook. We are pleased that Bajaj Allianz Life’s Dynamic Asset Allocation Fund, a significant addition to our ULIP offerings, will enable investors to seamlessly move their funds in line with market trends. This feature aims to provide customers with peace of mind by dynamically handling asset allocation through a proprietary quantitative model and insights from fund managers. With a disciplined approach, the fund empowers investors on their path to achieving life goals.”
Why should you invest in this fund?
Customers can consider some of the key points while investing in the Bajaj Allianz Dynamic Asset Allocation Fund. These include:
Dynamic asset allocation management: Retail investors often struggle to adjust their asset allocation in response to shifting market conditions. This fund offers a solution by employing a proprietary quantitative model and removing the complexity of timing equity-debt allocation changes by a policyholder.
There would be limited engagement of the Fund Manager (on the asset allocation mix) due to the quantitative model-based investment approach. This approach will also help investors to follow a disciplined approach towards asset allocation and reduce individual behavioural biases.
Optimize risk and return: The investment strategy not only seeks growth but also aims to minimize volatility and protect against downside risks during market corrections. By following this strategy, the fund endeavours to shield investors from excessive market fluctuations, providing a level of stability that can be especially appealing during uncertain times.
Significant traction from investors for the strategy: In the mutual fund industry, dynamic asset allocation funds (also known as balanced advantage funds) have gained significant traction from investors because they are getting the right advantage at the right time of the market.
Investors looking for an investment option that earns both returns while ensuring enough insurance coverage can opt for this ULIP option considering how the right mix of equity, debt, and liquid assets will help them tide over tough market conditions while lending them adequate financial security.