SBI MF’s Dynamic Asset Allocation Active FoF goes a step beyond what BAFs do, in helping investors get the twin benefits of disciplined asset allocation as well as nimble allocations within each asset class.
While this FoF uses the same proprietary asset allocation model that the fund house’s BAF uses to determine debt and equity allocations, Nidhi actively tracks markets to discern style, cycle and sector trends basis which she allocates the equity portfolio appropriately across SBI MF’s range ofequity funds.
Being a FoF, nimble movements are much easier as she has to only get in and out of underlying funds, without worrying about manoeuvering the portfolios of underlying funds.
The FoF structure also cuts out tax incidence which investors would have to suffer, if they attempt a similar nimble strategy across different funds.
Another key advantage is the fact that in a single solution, investors get the entire range of high quality, highly experienced team of SBI MF fund managers working for them which brings in style diversity and manager diversification benefits, while staying focused on nimble alpha generation.
The fund has got off to a good start on performance, though its still early days.
The model’s equity allocation went down to 20% by mid 2024 – ahead of the correction, went up to around 40% by Feb 2025 when the correction was at its sharpest and is now around 60% as a cyclical recovery has begun to take root.
The FoF is tilted towards large caps due to relative valuations and towards cyclicals over defensives. Market sentiment indicators are in neutral zone, market regime is looking for direction. Growth factor is doing better than value and it looks like momentum factor may be gearing up for its round of leadership in the coming months.