Can a mutual fund alter the asset allocation while deploying funds of investors?Based on the market trends, a prudent fund manager can change the asset allocation.
10 Dec 2008
Based on the market trends, a prudent fund manager can change the asset allocation. This means that the manager can invest higher or lower percentage of the fund in equity or debt instruments compared to what is disclosed in the offer document.
The asset allocation can be done on a short term basis to achieve objectives such as protecting the Net Asset Value (NAV) of the fund.
Fund managers have a certain degree of flexibility in altering the asset allocation considering the interest of the investors. If the MF wants to change the asset allocation permanently, they have to inform the unit holders and provide the option to exit the scheme at prevailing NAV without any load.