Going Dynamic

INFO REVIEW

OptiMix has launched its fourth fund, the OptiMix Dynamic Multi-Manager Fund of Funds (ODFoF). A three year closed-ended fund, ODFoF may invest up to 100 per cent in equity or debt or a mix of the two. OptiMix launched its asset allocation fund in July and two hybrid funds in May.

The investing strategy for the Dynamic plan would be similar to the one used for its other three plans and relies heavily on its research methodology.

Mugunthan Siva, chief investment officer, OptiMix, "Qualitative factors, which includes the quality of the manager, stock selection process, investment team among others gets two-thirds weightage while the quantitative process which looks at factors such as historical performance accounts for the rest."

Asset allocation, however, will be mechanical and based on triggers embedded in the system. With Sensex at 12K the allocation might be 60 per cent equity and 40 per cent debt while a further spurt would call for a reduction in exposure to equity .

Unlike the funds launched by OptiMix thus far, the Dynamic fund is a closed-ended one. "Investors with a long-term view could look at this fund, which thanks to its flexible asset allocation philosophy, no capital gains on buying and selling or entry/exit loads would be able to capture value over its three year duration," says Sumeet Vaid, chief marketing officer, OptiMix.

A key advantage of a FoF is its diversified investment process which spreads its risks. "Even in a situation where category returns are poor, you have to make really bad calls to underperform the benchmark,"says Vaid. The diversification strategy ensures that returns average out.

While there aren't similar funds in the OptiMix folio, as of September 6, the 15 and 30 per cent equity (hybrid) plans launched in May have given a three month return of 3.59 and 4.07 per cent against category (MIP) returns of 4.81.

The benchmark for the Dynamic Fund is the Crisil Balanced Fund Index which has given a three year return of 32.54 per cent. While there is no entry load, investors will have to pay an exit load based on the unamortised initial issue expenses.

NFO opens: August 30
NFO closes: September 28