Multi asset allocation funds are seen as an ideal category for lumpsum investments given their ability to dynamically allocate across all key asset classes.
ICICI Pru’s Asset Allocator Fund adds two more features that Dharmesh says makes it the ideal choice for lumpsum investing: (1) It has maximum flexibility to move across asset classes with a mandate that allows it0%-100% for each asset class unlike MAAFs that have to allocate minimum 10% to each asset class, and (2) Its FoF structure gives investors exposure to a wide range of the AMC’s fund managers, thus effectively addressing single fund manager risk.
The fund has established a strong track record of outperforming markets over time while protecting downside effectively during corrections, thus enabling it to deliver superior risk adjusted returns.
Asset allocation model builds on I Pru’s multi factor mode lby including yield gap as an additional factor to gauge relative attractiveness of debt vs equity. Equity allocation has been very dynamic – ranging from highs over 80% after the covid crash to lows in the teens prior to the Russia-Ukraine war. Equity is currently 38% of the portfolio, gold around 5% and the balance is in debt.
Equity allocation is currently defensively positioned with overweight allocations to healthcare, IT and consumption. The only cyclical that’s overweight is banking – where valuations continue to look attractive.