Unifi Dynamic Asset Allocation Fund – Direct (G) : NFO Details

The Unifi Dynamic Asset Allocation Fund – Direct (G) Fund is an open-ended hybrid mutual fund launched on March 3, 2025. It aims to generate income and capital appreciation by investing in a dynamic mix of fixed income instruments, equities, equity derivatives, and other permissible instruments. The fund offers no assurance of returns. The New Fund Offer (NFO) closes on March 7, 2025, with a minimum subscription of ₹5000. There is no entry load, and exit load is applicable based on the holding period.

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Details of the NFO: Unifi Dynamic Asset Allocation Fund – Direct (G)

Investment Objective and Strategy

Objective:

To generate income and/or capital appreciation by investing in a dynamically managed portfolio of fixed income instruments, equity & equity derivatives and other permissible equity/hybrid instruments.
However, there is no assurance that the investment objective of the Unifi Dynamic Asset Allocation Fund – Direct (G) will be achieved. The scheme does not guarantee or assure any returns.

Investment Strategies:

The strategy is to invest in a diversified portfolio of debt, equity and arbitrage instruments with an endeavour to generate consistent returns with minimal volatility and downside risks. The investment strategy will be active in nature. The allocation between debt and equity will be managed dynamically with an intent to generate income and capital appreciation opportunities.

• The Unifi Dynamic Asset Allocation Fund – Direct (G) shall invest in debt Investments ranging from government securities, AAA bonds to permissible investment grade papers with an intent to benefit from periodical accrual. Allocation across the rating and duration spectrum shall be typically based on the macro interest rate outlook and credit worthiness of the underlying issuers. Such investments may be held till maturity or tactical call to churn / book capital gains may be pursuedbased on rating upgrades, fundamental events, short-term interest rate movements etc. The debt investments will typically be subject to a detailed credit evaluation and liquidity assessment. The debt instruments would primarilybe a capital amortising structure to provide periodical liquidity. The scheme shall also have a reasonable allocation  to highly marketable instruments to enable liquidity buffer.

• The Unifi Dynamic Asset Allocation Fund – Direct (G) may invest in equity and equity related instruments across sectors and market caps with an intent to generate capital appreciation. Stock evaluation and decision to invest would typically be based on a detailed review of company fundamentals and underlying valuations in relation to growth prospects. Tactical allocation would be made in companies with strong cash flows and high dividend yields / periodical buy-back track record.  Fund Manager will retain the flexibility to hedge majority of the equity portfolio to minimize volatility. Opportunistic investments in equity special situations (corporate actions linked event arbitrage) like open offers, buy-backs, mergers, de-mergers, delisting, IPOs, etc, shall be made from time to time post detailed evaluation

• The Scheme may invest in various derivative instruments which are permissible under the applicable regulations. Such investments shall be subject to the investment objective and strategy of the scheme and the internal limits if any, as laid down from time to time. These include but are not limited to futures (both stock and index) and options (stock and index).

• Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manager to identify such opportunities. Identification and execution of the strategies to be pursued by the fund manager involve uncertainty and decision of fund manager may not always be profitable. No assurance can be given that the fund manager will be able to identify or excuse such strategies.

The risks associated with the use of derivatives are different from or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Portfolio Turnover: The scheme being an open-ended scheme, it is expected that there would be frequent subscriptions and redemptions. Hence, it is difficult to estimate with any reasonable measure of accuracy, the likely turnover in the portfolio. If trading is done frequently there may be an increase in transaction cost such as brokerage paid etc. The fund manager shall endeavour to optimize portfolio turnover to maximize gains and minimize risks keeping in mind the cost associated with it. The Scheme has no specific target relating to portfolio turnover.

Risk Associated with Unifi Dynamic Asset Allocation Fund – Direct (G)

•Equity and equity related instruments are volatile and prone to price fluctuations on a daily basis. The liquidity of investments made in the Unifi Dynamic Asset Allocation Fund – Direct (G) may be restricted by trading volumes and settlement periods. Settlement periods may be extended significantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases, due to settlement problems, could cause the Scheme to miss certain investment opportunities. Similarly, the inability to sell securities held in the Scheme portfolio would result at times, in potential losses to the Scheme, should there be a subsequent decline in the value of securities held in the Scheme portfolio. Also, the value of the Scheme investments may be affected by interest rates, currency exchange rates, changes in law/ policies of the government, taxation laws and political, economic or other developments which may have an adverse bearing on individual securities, a specific sector or all sectors.

• Investments in equity and equity related securities involve a degree of risk and investors should not invest in the Scheme unless they can afford to take the risk of loss.

• Trading volumes, settlement periods and transfer procedures may restrict the liquidity of the investments made by the scheme. Different segments of the Indian financial markets have different settlement periods and such periods may be extended significantly by unforeseen circumstances leading to delays in receipt of proceeds from sale of securities.

• The AMC may invest in to be listed securities within the regulatory limit. This may however increase the risk of the portfolio as these to be listed securities are inherently illiquid in nature and carry larger liquidity risk as compared to the listed securities or those that offer other exit options to the investors.

• Interest-Rate Risk: Fixed income securities such as government bonds, corporate bonds, money market instruments and derivatives run price-risk or interest-rate risk. Generally, when interest rates rise, prices of existing fixed income securities fall and when interest rates drop, such prices increase.

The extent of fall or rise in the prices depends upon the coupon and maturity of the security. It also depends upon the yield level at which the security is being traded.

• Re-investment Risk: Investments in fixed income securities carry re-investment risk as interest rates prevailing on the
coupon payment or maturity dates may differ from the original coupon of the bond.

• Basis Risk: The underlying benchmark of a floating rate security or a swap might become less active or may cease to exist
and thus may not be able to capture the exact interest rate movements, leading to loss of value of the portfolio.

• Spread Risk: In a floating rate security the coupon is expressed in terms of a spread or mark up over the benchmark rate. In
the life of the security this spread may move adversely leading to loss in value of the portfolio. The yield of the underlying
benchmark might not change, but the spread of the security over the underlying benchmark might increase leading to loss
in value of the security.

• Liquidity Risk: The liquidity of a bond may change, depending on market conditions leading to changes in the liquidity
premium attached to the price of the bond. At the time of selling the security, the security can become illiquid, leading to
loss in value of the portfolio.

• Liquidity Risk on account of unlisted securities: The liquidity and valuation of the Schemes‘ investments due to their holdings
of unlisted securities may be affected if they have to be sold prior to their target date of divestment. The unlisted security
can go down in value before the divestment date and selling of these securities before the divestment date can lead to
losses in the portfolio.

• Credit Risk: This is the risk associated with the issuer of a debenture/bond or a Money Market Instrument defaulting on
coupon payments or in paying back the principal amount on maturity. Even when there is no default, the price of a security
may change with expected changes in the credit rating of the issuer. It is to be noted here that a Government Security is a
sovereign security and is the safest. Corporate bonds carry a higher amount of credit risk than Government Securities.
Within corporate bonds also there are different levels of safety and a bond rated higher by a particular rating agency is
safer than a bond rated lower by the same rating agency.

• Settlement Risk: Fixed income securities run the risk of settlement which can adversely affect the ability of the fund house
to swiftly execute trading strategies which can lead to adverse movements in NAV.

Risk Mitigation Strategies of Unifi Dynamic Asset Allocation Fund – Direct (G)

• The Unifi Dynamic Asset Allocation Fund – Direct (G) will comply with the prescribed SEBI limits on exposure. Risk will be monitored, and necessary action would be taken on the
portfolio, if required. Attribution analysis will be done to monitor the under or over performance vis-a-vis the benchmark and the reasons
for the same. Portfolio volatility & concentration The overall volatility of the portfolio would be maintained in line with the objective of the scheme Volatility would be monitored with respect to the benchmark.

• Liquidity The scheme will predominantly invest across market capitalisation which are actively traded and thereby liquid. The liquidity
would be monitored, and necessary action would be taken on the portfolio if required. Stock turnover is monitored at regular intervals.

• The scheme would typically have a low to medium duration portfolio. The scheme may take positions in interest rate derivatives to hedge market/interest rate risks .The Fund will endeavour to minimise Credit/Default risk by primarily investing in investment grade fixed.

Who Should invest in Unifi Dynamic Asset Allocation Fund – Direct (G)?

• Income generation and Capital appreciation over medium to long term.
• Investment in diversified portfolio of debt, money market, equity and equity related instruments while managing risk through active asset allocation.