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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Selection

A client with a 7-year horizon and moderate risk appetite wants a single scheme that automatically maintains a mix of equity and debt, and shifts allocation based on valuation without the client rebalancing. Which category best fits this need?

A dynamic asset allocation or balanced advantage fund fits best. It moves between equity and debt automatically using its model, so the client need not rebalance. Index and thematic funds stay fully in equity, while overnight funds hold only one-day instruments and offer no growth objective.

  1. ADynamic asset allocation or balanced advantage fundCorrect
  2. BOvernight fund
  3. CIndex fund tracking Nifty 50
  4. DThematic equity fund

Explanation

Balanced advantage or dynamic asset allocation funds change equity and debt proportions dynamically according to the fund's model, such as valuation. An index fund has fixed full equity exposure, a thematic fund is concentrated, and an overnight fund holds only one-day securities.

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