FUND PHILOSOPHY*

IDFC Dynamic Equity Fund is a hybrid fund with active equity allocation changing based on the trailing P/E of Nifty 50 index. The fund has a pre-defined model which indicates the range of active equity allocation based on P/E levels, and there are 6 different range of equity allocation possible. Higher the P/E band, lower will be the active equity allocation and vice versa.

Change of bands happen once a month while changes within the band happen dynamically on a day to day basis. The active equity portfolio is managed like a diversified fund. Active stock selection philosophy combines quality stocks with good growth potential. The quality filters for the fund are – conversion of EBIDTA to operating cash – OCF as % of EBIDTA > 33%; Moderate leverage: Debt EBIDTA <3x; Profitability: EBIDTA / Net operating Assets >30%. Thus, companies which qualify these parameters and have higher visibility of growth versus peers will form the core portfolio. Depending on P/E levels, the fund can have more large or mid/small cap names. The fund will also use Nifty futures to dynamically manage active equity allocation within a month.

The debt portion of the fund is actively managed. The portfolio emphasizes on maintaining high credit quality and currently has 100% in AAA or equivalent instruments. Further the portfolio is oriented towards short-to-medium duration strategies.

Bloomberg Nifty P/E data as on 31st August 2020 indicates a value of 25.9 and equity band for the month will remain the same at 40-55%.

      OUTLOOK

Indian equities continued their upward momentum in August following the trend in global markets, even as India continues to see a sharp increase in daily new Covid-19 cases. In August and over the last 3-month basis, Small Caps significantly outperformed Mid and Large Caps. Since the bottom in March-20, Large, Mid and Small Caps have bounced 50%, 52% and 66% respectively.

Going forward, the pace of economic recovery would depend largely on the extent of local lockdowns on account of spread of Covid-19. Markets seems to have run ahead of fundamentals and are less than 10% lower than all-time highs. Global and domestic liquidity seems to have played a significant part in the sharp up move seen in the markets. Investors should tread with caution as the number of cases and deaths in India continue to rise. Also, earnings uncertainty for FY21 is fairly high with a wide range of analyst estimates.

     FUND FEATURES: (Data as on 31st August'20)

Category: Dynamic Asset Allocation or Balanced Advantage
Monthly Avg AUM: Rs953.33 Crores
Inception Date: 10th October 2014
Fund Manager:
Equity Portion : Mr. Arpit Kapoor and Mr. Sumit Agrawal (w.e.f. 01/03/17)
Debt Portion : Mr. Arvind Subramanian (w.e.f. 09/11/2015)
Standard Deviation (Annualized): 13.86%
Modified Duration: 2.53 years*
Average Maturity: 3.36 years*
Macaulay Duration: 2.65 years*
Yield to Maturity: 4.94%*
*Of Debt Allocation Only
Benchmark: 50% S&P BSE 200 TRI + 50% NIFTY AAA Short Duration Bond Index (w.e.f 11/11/2019)
Asset allocation:
Gross Equity (including Arbitrage): 65.47%
Debt: 34.53%
Net Equity: 40.05%
Market Cap Split:
Large Cap: 76.50%
Mid and Small Cap: 23.50%
Minimum Application Amount: Rs5,000/- and any amount thereafter.
Exit Load: In respect of each purchase of Units:
- For 10% of investment: Nil
- For remaining investment: 1% if redeemed/ switched out within 1 year from the date of allotment (w.e.f. July 5,2017)
SIP Frequency Monthly (Investor may choose any day of the month except 29th, 30th and 31st as the date of instalment.)
Options Available: Growth, Dividend (Payout, Reinvestment and Sweep (from Equity Schemes to Debt Schemes only))

PORTFOLIO

(31 August 2020)

     SECTOR ALLOCATION

     RISKOMETER