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How Dancing Uncle helped Rahul find Peace!

Brand Story by DSP MUTUAL FUND
Nov 18, 2019, 01.25 PM IST

Rahul, 22, was at lunch with his friends. The conversation was intense- with long hours at work, how does one balance work and life? So how does one do something for themselves?

The answer came up in that discussion itself- Investing. Rahul kept quiet through most of the conversation. He felt overwhelmed. All his friends seemed to be knowledgeable about stocks and other investing categories! Rahul felt behind. “Mutual funds sahi hai!” was the extent of his investing knowledge. Even with mutual funds, he didn’t really understand much.

One thing recognized post that lunch was that he needed to start investing too, like all his friends. But questions like “Where to invest?”, “How to invest?”, “How much to invest where?”, “What is a good investment strategy?” had been disorienting him.

A friend then shared a fun video on Whatsapp, which said “Dancing Uncle is back”. Curious, he clicked on it and laughed while watching it- a viral dancing sensation on social media. Towards the end of the video, he noted something called Dynamic Asset Allocation Funds. What struck him is that the character in the video mentioned being worried about the exact same questions that were on his mind.

Gajendra to Rahul’s rescue. Or was it DAAFs?

Gajendra told Rahul that investing is not just a problem for newbies, but one that also bothers experienced investors. The first advice he gave to Rahul is to have a good mix of equity and debt in his portfolio- as equity can help make money over the long term while debt can help to give some protection from volatility. But what is the right balance of equity-debt and how can one keep track of this in changing markets? And should one change this balance regularly? Thankfully for Rahul, Gajendra said that these exact questions can be addressed by dynamic asset allocation funds.

But what is asset allocation?

Rahul was stumped. He had heard of equity and debt, but what’s this new bird called Asset Allocation? Gajendra stepped in and told him how simple but critical this topic was. Asset Allocation refers to distributing money over multiple asset classes like equity or debt, to balance risk with potential rewards. The allocation to each asset class is determined by an individual’s risk tolerance, goals and investment time horizon.

A strong asset allocation also requires rebalancing the portfolio periodically. This is because every asset has its own performance cycle and so, each of them may perform differently in a given time period. It is quite possible that the asset that has performed well recently is dominating one’s portfolio. This increases risk and the portfolio will then need to be re-adjusted to a new, suitably balanced allocation.

One can understand more about asset allocation here.

As Rahul learnt, DAAFs help investors invest in both debt and equity. They are termed as ‘dynamic’ because they dynamically change allocation between debt and equity by constantly tracking stock markets and interest rates to automatically decide the asset allocation that could help take advantage of the existing market conditions. Shifting between debt and equity can be done on a daily, monthly or quarterly basis depending on the mandate of the fund.

When the allocation towards equity increases, the risk level will move up and so will the possibility of higher returns. However, when the allocation towards debt increases, the risk goes down, also reducing the potential returns. DAAFs try to work well for all kinds of investors, as they:

Aim to build wealth across market cycles

Help manage market volatility through appropriate usage of debt instruments

Eliminate the need to time markets constantly

Manage portfolio rebalancing automatically

Avoid emotional, sentiment-based investing

Are easy to buy and sell at any time

Help to Provide better tax efficiency by using arbitrage opportunities

DAAFs are all-weather products, meant for both first timers as well as experienced investors! Given how they work in different market conditions, they may benefit almost all kinds of investors in some way or the other!

Uncle did a lot more than just Dance

Rahul was pleased. He had taken his first step towards a better future. Gajendra, his advisor, was also certain that Rahul was on the right path.

Dancing Uncle had not just taken the internet by storm, but Rahul’s world too.

Learn all about Dynamic Asset Allocation Funds here

All Mutual fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (‘RMF’). For more information on KYC related requirements / change in address/phone number, to verify RMF and procedure to lodge/ redressal of any complaints visit Investor education and awareness initiative by DSP Mutual Fund. “Mutual Fund investments are subject to market risks, read all scheme related documents carefully.”

Media Contact:
Mansi Shah, Assistant Vice President , 2267177113,

Disclaimer: Content Produced by DSP MUTUAL FUND

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