First the caveat – I don’t like Asset Allocation funds, and never invest in one. I always thought of Hdfc Prudence (old name) as an aggressive Equity fund where the Fund manager gets a chance to keep money in debt instruments in times of over heating of equity. Just a flexible, aggressive equity fund.

For DIY people who wish to give the Asset allocation and market timing options to their fund manager, I Pru BAF is a good fund. I heard about it for the first time from Naren. In fact my respect for Naren is another caveat too. My respect for both Prashant and Naren is so high, that I am barely able to criticise them. Their track record is blinding. Like how I can’t pick a bad shot or bad innings of Sachin or Virat Kohli. I just can’t – that’s the caveat.

Asset Allocation is a client call. Hence I do not like it when my fund manager takes a cash call (hey that’s my job, not yours). I will do my asset allocation – if I invest in 10 funds and each FM takes a cash call, I will be lynched!

I don’t like a regulator who makes 200 sub-categories and does not have a system to check whether all are true to label. For example the Hdfc BAF is very different from the I Pru BAF. In fact other than the word BAF they have nothing in common. At least like the RoC does, this regulator should also do some name sanction after checking for “true to label tests”. Hello Regulator are you listening?

I am sure that if SEBI (and some CEO, CIO, Head of Compliance) officials are asked to take a test on Sebi classification (and they being handed the notificaion copies) – they will FAIL WITH flying colors. Serious. Not joking. IFA understanding it is of course a dream.

Dynamic Asset allocation – also is an asset allocation fund like BAF – again this has obviously done well during such periods of such volatility. Obviously they will tom tom the performance. I would love to see how much wealth they create over say 20 years vis-a-vis a well managed equity fund. Exactly why I like Hdfc Prudence – it has performed as well as say Hdfc Top 100 – another aggressive equity fund – by the same manager. However technically I got better risk adjusted return in Prudence than in Top 100.

I still think that Hdfc BAF is a good fund, but look at it as an aggressive equity fund that does not rebalance. It is not a BAF – and we have a regulator who has no clue why he has created such a big basket of “flexibility”.

When an Amc’s BAF does well, it goes to town tom tomming its performance. Who will ask them why their ‘Value’ fund is not doing well? Or did they ever, ever tell you “take money from our Value fund, midcap fund and put it in our BAF and US fund”. Have you ever ever heard this?

Clearly one “best” advice over the past 18 months has been “redeem units buy shares” of the same fund house. Has generally worked.