Why a falling valuation index led to higher equity allocation in January

According to WhiteOak Capital Mutual Fund, its in-house model-Market Valuation Index-has moved down to 99 in January 2026 from 100.5 in December 2025

WhiteOak Capital Mutual Fund’s internal Market Valuation Index (MVI) declined to 99 in January 2026, down from 100.5 in December 2025, signalling relatively more attractive equity valuations compared with the previous month.

 

The MVI is an in-house valuation indicator that uses multiple fundamental and market variables — including price-to-book ratio adjusted for return on equity (ROE), the relationship between government bond yields and earnings yield, and an overlay of market volatility (VIX) — to assess whether equities appear expensive or attractive at a given time. In simple terms, a lower index suggests better entry points for equities, while a higher reading indicates relatively expensive markets.

 

 

Reflecting this shift, the WhiteOak Capital Balanced Advantage Fund increased its net equity allocation to 65.89% in January 2026, up from 59.2% in December 2025. This is the highest equity exposure since the fund’s launch in February 2023, when it began with an allocation of about 59.6%. The fund dynamically adjusts its equity exposure based on market valuation signals rather than market levels alone. 

WOC BAF = WhiteOak Capital Balanced Advantage Fund, Net Equity = Unhedged Equity Levels of WhiteOak Capital Balanced Advantage Fund. Above numbers are rounded off to nearest decimal. Past performance may or may not be sustained in future and is not

 

How the strategy works

 

Balanced advantage funds typically shift between equity and debt depending on market conditions. WhiteOak Capital’s strategy uses a “hold philosophy”, which gradually adds equity when markets weaken or valuations improve and reduces exposure during strong rallies to manage risk.

 

For example, despite the Sensex rising from about 58,992 in March 2023 to around 82,270 in January 2026, the fund increased equity allocation because valuation indicators suggested equities were becoming relatively more attractive compared to other asset classes.

 

Fund growth

 

The WhiteOak Capital Balanced Advantage Fund’s assets under management (AUM) have grown significantly since launch — from ₹316 crore in February 2023 to ₹2,131 crore as of January 31, 2026 — reflecting increasing investor interest in dynamic asset allocation strategies. 

WOC BAF = WhiteOak Capital Balanced Advantage Fund, Net Equity = Unhedged Equity Levels of WhiteOak Capital Balanced Advantage Fund. Above numbers are rounded off to nearest decimal.

 

What this means for investors

 

For investors, the message is straightforward: valuation-based asset allocation strategies may increase equity exposure even when markets are at higher levels, if underlying valuation indicators improve.

 

The drop in the Market Valuation Index suggests that market conditions are becoming more favourable for equity allocation, even as volatility and global uncertainties persist. Funds using dynamic allocation models aim to balance growth opportunities with downside protection, especially during uncertain market cycles.