Parag Parikh Dynamic Asset Allocation Fund vs Parag Parikh Conservative Hybrid Fund

We evaluate the portfolios of Parag Parikh Dynamic Asset Allocation Fund (PPDAAF) and Parag Parikh Conservative Hybrid Fund (PPCHF) to understand when every fund can be utilized.

As famous earlier – Parag Parikh Dynamic Asset Allocation Fund: Who ought to make investments? – the AMC needs to take care of a debt-oriented allocation, making PPDAAF extra tax-efficient than the PPCHF.

Long run capital positive factors from PPDAAF items older than three years will likely be taxed at 20% with indexation, whereas positive factors from PPCHF items will at all times be taxed as per slab. For extra particulars, see: Will Parag Parikh Dynamic Asset Allocation Fund positive factors be taxed as per slab?

Is PPDAAF a tax-efficient “different” to PPCHF? The reply will not be a easy ‘sure’ or ‘no’.

PPDAAF is benchmarked to CRISIL Hybrid 50+50 Average Index (50 direct fairness), whereas PPCHF is benchmarked to CRISIL Hybrid 85+15 – Conservative Index TRI (15% direct fairness). So, you anticipate PPDAAF to carry extra direct fairness than PPCHF.

Allow us to take a look at the present asset allocations of each funds (as of Feb 29 2024, on the time of writing). Please notice that PPDAAF can change fairness from 0 to 100%. So, though the AMC is anticipated to not change asset allocation an excessive amount of, we should recognise that it will probably. So, from this side alone, PPDAAF will not be a alternative for PPCHF. However, if we “consider” the AMC will preserve a debt-oriented allocation, we are able to talk about different issues.

Fairness 13.11% 14.39%
Arbitrage 23.40% 0.55%
Company Bonds 17.61% 4.24%
Gilts/SDLs 23.45% 60.38%
REITs/InvITs 7.81%
Cash Market 8.66% 10.18%
Money 13.77% 2.45%

The money and cash market allocation of PPDAAF can change since it’s a new fund. For now, the 2 funds are roughly related in threat profile, however this is probably not the case in future.

  • Skilled high-net-worth buyers can contemplate changing PPCHF with PPDAAF of their long-term objective portfolios. Caveat: PPDAAF might maintain greater unhedged fairness than the conservative hybrid fund.
  • Regardless of the tax therapy, PPCHF continues to be a sensible choice for long-term targets. So, risk-averse buyers can proceed to put money into the fund.
  • We don’t suggest utilizing PPDAAF after retirement until the corpus is plentiful.
  • We don’t suggest utilizing both fund for short-term targets – lower than 5 years.
  • New buyers should not be in a rush to put money into PPDAAF. They’ll wait and see the portfolio and efficiency (threat and returns) for some time earlier than contemplating it.

My plan:  Readers might know I’m invested within the Parag Parikh Conservative Hybrid Fund. See: Why I began to put money into Parag Parikh Conservative Hybrid Fund. I continued to put money into the fund after the March 2023 taxation modification talked about above.

I’ll now divert recent investments into the Parag Parikh Dynamic Asset Allocation Fund in my retirement portfolio to scale back my tax burden with out an excessive amount of change within the funding threat profile. I nonetheless maintain PPCHF in my retirement and my son’s future portfolios. I could put money into PPCHF for my son’s future portfolio. I need to warning readers that this transfer is suited to my circumstances. That is neither a suggestion nor an endorsement. Kindly evaluate your circumstances earlier than investing.

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