Dynamic asset allocation gains currency in choppy equity, debt markets

Such funds alternate between debt and equity depending on market conditions

Investors are turning to dynamic asset allocation offered by mutual funds, seeking a safe shore after volatility in equity and debt markets.

The category---also known as balanced advantage funds—saw net inflows of Rs 2,006 crore in February and of about Rs 660 crore in February. Investors shunned such schemes before amid a strong rally in the equities market. Between September and December, the dynamic asset allocation fund category logged net outflows of Rs 2,000 crore.

The dynamic asset allocation strategy involves investing in equity, debt and derivatives. When equity markets are high, it increases allocation to debt and vice-e-versa. This