The Kotak Dynamic Asset Allocation Fund is a close-ended balanced scheme with 36 months maturity.
The objective is to generate income by investing in debt and money market securities and to generate capital appreciation by investing in equity and equity related securities. The equity investments will be bottom-up stock selections across market capitalisations.
The equity exposure can range from 0 to 90 per cent while the debt exposure from a minimum of 10 per cent to a maximum of 100 per cent. The asset allocation will be guided by trends in the equity market. If the market is on an upward trend, allocation to equity will increase. If the market is moving downwards, the allocation decreases. However, there may be times when the fund managers do not follow this principle as other factors such as volatility in interest rates, current Nifty level, and time to the expiry of the scheme will also be considered.
The scheme will primarily use equity index futures for the purpose of achieving its desired equity exposure. It may also decide to use equity index options when necessary. The fund will resort to derivatives for the purpose of hedging, portfolio rebalancing and leverage.
Since there is no dividend option, the return to investors will be in the way of capital appreciation.
Though close-ended, redemptions will be allowed on the 25th of every calendar month at prices related to applicable NAV.
Unit cost during NFO: Rs 10
Offer opens: November 14, 2006
Offer closes: December 7, 2006
Minimum investment: Rs 5,000
Type: Close-ended balanced scheme
Maturity: 36 months
Benchmark: Crisil Balanced Fund Index
Fund Managers: Sajit Pisharodi, Ritesh Jain
Entry Load: Nil
Exit Load: Nil