By Nivesh Gyan 9 JulyCategory: Build Wealth
Dynamic Equity Funds are the ones that allocate less to equities when market valuations seem expensive and increase allocation to equities when market valuations look cheap.
These funds have a mix of debt and equity in their portfolio. The equity component in such funds varies from 30% to 70-80%, and at times even go up to 100%.
Ideally, first-time investors with low risk appetite should invest in these funds.
These funds are taxed as equity funds for investors.
When the fund lowers its exposure to equities, it ensures that equity plus arbitrage component of the scheme is at least 65% of the corpus, which helps it qualify for equity taxation.
Dynamic equity funds tend to hold higher cash during the time of rising markets, they may
underperform during strong market conditions but they are capable of automatically rebalancing