The investment objective of the Scheme is to generate income/long-term capital appreciation by investing in equity, equity derivatives, fixed income instruments and foreign securities. The allocation between equity instruments and fixed income will be managed dynamically so as to provide investors with long term capital appreciation while managing downside risk. However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.
The Scheme will dynamically allocate its net assets to equity and equity related securities and debt instruments. The portfolio construct & asset allocation of the fund shall vary from 0% Net Equity - 100% Debt or 100% Net Equity - 0% Debt based on SAMCO`s proprietary TRANSFORMER model. The gross equity and equity related exposure would be normally maintained between 65%-100%, the net equity exposure can be brought down below 65% all the way to 0% through various derivative strategies to protect downside in volatile times. The equity exposure is thus dynamically managed and is increased when various factors are favourable towards equity as an asset class or is brought down when the factors are not favourable. The TRANSFORMER asset allocation model also has built-in trailing stop loss systems to cut risks and equity exposure to minimize drawdown in corrections and bear markets. Subject to the Regulations and the applicable guidelines, the Scheme may engage in Stock Lending activities. The principal asset allocation of the fund shall be determined based on momentum in equity markets and extreme mean reversion signals which shall be calculated using SAMCO`s proprietary TRANSFORMER model. Fundamentally the scheme will operate based on trend following strategies i.e., when markets are in clear uptrends with lower volatility, equity allocations shall be higher and when markets are breaking down, in correction or bear market phases, net equity allocations shall be zero or at extremely low levels. Only in extremely panic or euphoric conditions, the scheme will move to mean reversion models and build equity exposure in bear markets or cut equity exposure in bull markets. Rebalancing based on the model shall happen on real time dynamic basis and will not follow a monthly/quarterly rebalancing model.
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