Parag Parikh Dynamic Asset Allocation Fund

The Parag Parikh Dynamic Asset Allocation Fund (PPDAAF) is an open-ended dynamic asset allocation scheme of PPFAS Mutual Fund , regulated by the Securities and Exchange Board of India , managed by PPFAS Asset Management Private Limited and allotted on 27 February 2024. Its scheme information document (SID) lets it hold anywhere from 0 to 100 per cent in equity and in debt, it buys no overseas securities, and it is benchmarked to the CRISIL Hybrid 50+50 Moderate Index. It held Rs 2,532.94 crore on 30 September 2026.

The scheme sits in SEBI’s Balanced Advantage Fund or Dynamic Asset Allocation category, but it does not behave like most funds in that category. Most schemes in that category are equity-oriented for tax, keeping gross equity, counting hedged arbitrage, at 65 per cent or more, as Business Today noted when the scheme was launched. PPFAS built this scheme to stay below that line. On 30 September 2026 its equity was 22.45 per cent, of which 7.75 per cent was hedged arbitrage, with 13.67 per cent in real estate investment trusts and 63.88 per cent in debt, money market instruments and liquid fund units.

That design sets its tax treatment. The PPFAS Tax Reckoner for FY2026-27 classes the scheme as other than equity oriented and not a specified mutual fund, so gains on units held 24 months or more are taxed at 12.5 per cent and earlier gains at the investor’s slab rate. At the February 2024 launch the purpose was indexation, which the Finance Act 2023 had taken away from the AMC’s Parag Parikh Conservative Hybrid Fund . The Finance (No. 2) Act 2024 then removed indexation on long-term gains on mutual fund units from 23 July 2024.

Six fund managers run the scheme, including chief investment officer for equity Rajeev Thakkar . Its direct plan returned 6.55 per cent a year from allotment to 30 September 2026, against 5.10 per cent for the benchmark, at a base expense ratio of 0.23 per cent. Its tax position is set by the Income-tax Act 2025 , in force since 1 April 2026.

Launch, new fund offer and allotment

The Parag Parikh Dynamic Asset Allocation Fund’s new fund offer ran from 20 to 22 February 2024, as Business Today reported on 20 February 2024 from the offer details, with the scheme due to reopen for continuous sale on 28 February 2024. PPFAS allotted units on 27 February 2024 at Rs 10 each; the AMC’s factsheet and the SID both give 27 February 2024 as the inception date, and every since-inception return the AMC publishes is computed from that date.

It was the sixth PPFAS scheme. The AMC’s earlier schemes were the Parag Parikh Flexi Cap Fund (allotted 24 May 2013), the Parag Parikh Liquid Fund (11 May 2018), the Parag Parikh ELSS Tax Saver Fund (24 July 2019), the Conservative Hybrid Fund (26 May 2021) and the Parag Parikh Arbitrage Fund (2 November 2023). The Parag Parikh Large Cap Fund , allotted on 4 February 2026, became the seventh. The full sequence, with each NFO window, is in the PPFAS scheme launch timeline .

The SID records the scheme’s NSDL scheme code as PPFA/O/H/DAA/24/01/0006. Its sponsor is Parag Parikh Financial Advisory Services Limited, its trustee is PPFAS Trustee Company Private Limited, and its registrar is Computer Age Management Services Limited (CAMS ).

Tax design at launch in February 2024

PPFAS launched the scheme to give its investors a debt-heavy fund that still earned long-term capital gains treatment. The Finance Act 2023 had inserted section 50AA into the Income-tax Act 1961 , under which units of a fund with no more than 35 per cent in domestic equity shares, bought on or after 1 April 2023, gave short-term gains at slab rates whatever the holding period. The Conservative Hybrid Fund, which holds 10 to 25 per cent in equity, fell inside that rule.

Neil Parikh , the AMC’s chairman and chief executive, set out the reasoning in Business Today’s report of 20 February 2024:

“With the changes in the debt taxation laws which happened last, our conservative hybrid fund lost its indexation benefit. […] So, there is a clear gap in the product offering for such a product.”

The same report stated that the scheme would keep equity between 35 and 65 per cent to retain indexation, and quoted Neil Parikh describing it as “a relatively tax-friendly option, meant for their debt allocation”. Under the 1961 Act as it then stood, units of a fund in that band became long-term after 36 months under section 2(42A) and took 20 per cent tax with indexation under section 112.

The Finance (No. 2) Act 2024 changed the arithmetic from 23 July 2024. Long-term gains on such units were cut to 12.5 per cent without indexation, and the holding period for long-term treatment fell to 24 months. The scheme kept its intermediate position, but the indexation benefit Neil Parikh described in February 2024 no longer exists for any investor in it.

SEBI category and asset allocation limits

The scheme is a Balanced Advantage Fund or Dynamic Asset Allocation Fund under SEBI’s hybrid scheme categories. Paragraph 3.8.3 of the SEBI Master Circular for Mutual Funds of 20 March 2026 (HO/24/13/11(1)2026-IMD-POD-1/I/7602/2026) defines the category only as “Investment in equity/ debt that is managed dynamically”, with the uniform description “An open ended dynamic asset allocation fund investing in debt and equity instruments only”. The category dates from SEBI’s categorisation circular SEBI/HO/IMD/DF3/CIR/P/2017/114 of 6 October 2017, covered in the SEBI scheme rationalisation circular 2017 entry.

Unlike the other hybrid categories, SEBI sets no equity band. A conservative hybrid fund must hold 10 to 25 per cent in equity, a balanced hybrid fund 40 to 60 per cent and an aggressive hybrid fund 65 to 80 per cent, under the same paragraph. Each AMC sets its own limits in the SID, and under the 6 October 2017 categorisation circular an AMC may run only one scheme in each category.

The SID dated 28 November 2025 sets these limits as a share of net assets:

Table: asset allocation limits of the Parag Parikh Dynamic Asset Allocation Fund. Source: SID dated 28 November 2025, Part II section A.

Derivatives may be used up to 100 per cent of total assets for hedging and portfolio balancing. A long stock position and a matching short futures position count once, on the long side, so hedged arbitrage does not inflate the scheme’s measured equity. Cumulative gross exposure across equity, debt, derivatives, repo and other permitted assets may not exceed 100 per cent of net assets, the limit the SID cites from SEBI’s master circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/90 of 27 June 2024, since replaced by the master circular of 20 March 2026.

Instruments the SID excludes

The SID bars six classes of instrument outright: overseas securities, ADRs and GDRs, credit default swaps, short selling of securities, equity linked debentures, and debt instruments with special features such as AT1 and AT2 bank bonds. The overseas exclusion separates the scheme from the Parag Parikh Flexi Cap Fund, whose SID allows up to 35 per cent in foreign equity. The original SID also barred units of REITs and InvITs; the next subsection covers the change.

REITs counted as equity related from 1 January 2026

SEBI circular HO/24/13/12(1)2025-IMD-POD-2/I/157/2025 of 28 November 2025 reclassified units of real estate investment trusts as equity related instruments for mutual funds. A PPFAS notice-cum-addendum dated 24 December 2025 applied the change to five schemes, the Dynamic Asset Allocation Fund among them, with effect from 1 January 2026, and deleted REITs and InvITs from this scheme’s list of barred instruments. The addendum states that the change is not to be treated as a change in the scheme’s fundamental attributes.

On 30 September 2026 the scheme held 13.67 per cent in three REITs: Brookfield India Real Estate Trust (5.60 per cent), Embassy Office Parks REIT (5.57 per cent) and Knowledge Realty Trust (2.50 per cent). Under SEBI’s definition its equity related holdings were therefore 36.12 per cent. REIT units are not equity shares of a domestic company, so they do not count towards the 65 per cent test for equity oriented funds in income tax, a distinction covered in the REIT and InvIT exposure cap entry.

Investment strategy stated in the SID

The SID states the scheme’s primary objective as income from fixed income securities, arbitrage and other derivative strategies, with long-term capital appreciation from a portion in equity, and calls “an asset allocation overlay” its key value proposition. Equity weight moves with valuations: “In a scenario where Equity markets are attractive, the Scheme would exploit such opportunities with increased equity participation. In a scenario where equity markets are expensive, the Scheme would reduce the equity participation and actively use arbitrage and cash to hedge the portfolio.”

Stock selection is bottom-up, aimed at companies with a long-term sustainable competitive advantage, the same process PPFAS applies across its equity schemes and describes in PPFAS value investing . The SID gives no quantitative model, no valuation trigger and no published rule linking equity weight to an index valuation ratio. Allocation is a fund-manager decision within the 0 to 100 per cent limits.

The debt strategy allows the full range of debt and money market instruments, guided by credit quality, liquidity and the rate outlook, with active positioning on the yield curve. The arbitrage strategy covers cash-futures arbitrage, index arbitrage, and event-driven trades around dividends, buybacks and open offers, the methods described in the arbitrage mutual fund entry.

Portfolio on 30 September 2026

On 30 September 2026 the Parag Parikh Dynamic Asset Allocation Fund held more in government securities and state development loans than in equity. Government securities and state development loans were the largest block at 39.84 per cent, and every rated debt holding carried AAA (long term) or A1+ (short term), according to the PPFAS factsheet for September 2026.

Table: Parag Parikh Dynamic Asset Allocation Fund portfolio, 30 September 2026. Source: PPFAS Mutual Fund factsheet, September 2026. Subtotals by webnotes.in.

The nine unhedged stocks were Coal India (3.02 per cent), Petronet LNG (2.81), Power Grid Corporation of India (2.61), ITC (2.47), Nesco (1.06), Swaraj Engines (1.00), Power Finance Corporation (0.96), VST Industries (0.72) and Indus Towers (0.05).

The debt side carried a yield to maturity of 7.60 per cent, an average maturity of 4.19 years, a modified duration of 3.3736 years and a Macaulay duration of 3.5225 years. State development loans from Tamil Nadu, Maharashtra, Karnataka, Gujarat and Uttar Pradesh made up most of the government block, and the corporate bonds were issued by NABARD, SIDBI, Bajaj Finance, LIC Housing Finance, Tata Capital, Embassy Office Parks and IndiGrid. In September 2026 the fund added a 7.3 per cent Tamil Nadu SDL maturing in 2032 and exited three other state loans.

Taxation under the Income-tax Act 2025

Units of the Parag Parikh Dynamic Asset Allocation Fund are taxed as units of a fund that is neither equity oriented nor a specified mutual fund. The PPFAS Tax Reckoner for FY2026-27, prepared on the Finance Act 2026, places the scheme alone in that row, labelled “Equity 35% - 65%”; the label describes the band, and REIT units, equity related under SEBI’s rules, brought the scheme’s equity related holdings to 36.12 per cent in September 2026. The SID of 28 November 2025 reached the same result under the 1961 Act.

Table: tax on Parag Parikh Dynamic Asset Allocation Fund units, FY2026-27. Sources: PPFAS Tax Reckoner 2026-27; Income-tax Act 2025. Surcharge and 4 per cent cess apply on top.

Why the equity oriented rates do not apply

Section 198(8) of the Income-tax Act 2025 defines an equity oriented fund as one with at least 65 per cent of its total proceeds in equity shares of domestic listed companies, measured as an annual average. Only such units get the 20 per cent short-term rate under section 196, and the 12.5 per cent long-term rate above Rs 1,25,000 a year after 12 months under section 198. The Dynamic Asset Allocation Fund held 22.45 per cent in equity, hedged arbitrage included, on 30 September 2026, so neither rate is available. REIT units do not count towards the 65 per cent.

Why the specified mutual fund rule does not apply

Section 76 of the Income-tax Act 2025, which replaced section 50AA of the 1961 Act, makes every gain on units of a specified mutual fund bought on or after 1 April 2023 short-term. From FY2025-26 a specified mutual fund means one investing more than 65 per cent of its total proceeds in debt and money market instruments, or 65 per cent or more in units of such a fund, as the PPFAS Tax Reckoner records. The scheme’s debt, money market, TREPS and liquid fund holdings came to 63.88 per cent on 30 September 2026, a webnotes.in sum from the factsheet that counts every non-equity, non-REIT line and so is an upper bound for the test.

The margin is narrow. The test applies to the annual average, so the reckoner’s classification rests on how PPFAS manages the mix across a year, not on a single month-end. The earlier test under the Finance Act 2023, no more than 35 per cent in domestic equity shares, is no longer in force, and a scheme with 22.45 per cent in equity is not specified under the present wording. Hybrid mutual fund taxation and capital gains tax in India cover the general rules.

Fund managers

The Parag Parikh Dynamic Asset Allocation Fund had six named fund managers in the September 2026 factsheet. Five were named at the NFO in February 2024; the factsheet dates Raj Mehta’s and Tejas Soman’s tenure from 1 September 2025, the date the factsheet gives for both appointments.

Table: fund managers of the Parag Parikh Dynamic Asset Allocation Fund. Source: PPFAS factsheet, September 2026.

The SID describes Rukun Tarachandani as having managed the Kotak Equity Arbitrage Fund from May to December 2019 before joining PPFAS in March 2021, and Tejas Soman as a former fund manager at SBI Funds Management. The same six names manage the Conservative Hybrid Fund, according to the AMC’s scheme pages as on 30 September 2026.

Performance against the CRISIL Hybrid 50+50 Moderate Index

The Parag Parikh Dynamic Asset Allocation Fund beat its benchmark in both complete financial years since allotment and over its life to 30 September 2026. The benchmark carries a 50 per cent equity weight against the scheme’s 22.45 per cent in September 2026, and in the year to 30 September 2025 the Nifty 50 TRI returned -3.45 per cent.

Table: returns of the Parag Parikh Dynamic Asset Allocation Fund. Sources: PPFAS factsheet, September 2026, for 2026 rows and financial years; SID dated 28 November 2025, section G, for 2025 rows. Since-inception figures are compounded annual returns from 27 February 2024 on the Rs 10 allotment price.

The direct plan’s growth NAV was Rs 11.7883 on 30 September 2026, and the regular plan’s Rs 11.6932. The record of two years and seven months is short for a scheme whose tax design rewards holding for 24 months or more; the rolling versus trailing returns entry explains why a single trailing figure says little about a scheme this young.

Risk measures and riskometer

PPFAS rated the scheme Moderately High on the SEBI riskometer in September 2026, one step below the High rating of its benchmark. The key information memorandum dated 27 November 2025 had rated it Moderate;

The factsheet’s annualised risk measures for September 2026 were a standard deviation of 3.75 per cent, a beta of 0.39, a Sharpe ratio of 0.33 and an information ratio of 0.13. A beta of 0.39 means the scheme’s returns moved, on average, about two-fifths as much as the market measure PPFAS uses.

Expense ratio, exit load and minimum investment

The Parag Parikh Dynamic Asset Allocation Fund charged a base expense ratio of 0.23 per cent on its direct plan and 0.53 per cent on its regular plan on 30 September 2026, unchanged from August 2026. The base expense ratio excludes GST and the brokerage and transaction costs allowed under Regulation 66 of the SEBI (Mutual Funds) Regulations 2026 ; mutual fund TER in India covers the slab structure.

Table: costs and minimums of the Parag Parikh Dynamic Asset Allocation Fund. Sources: SID dated 28 November 2025; PPFAS factsheet, September 2026.

Any exit load collected, net of GST, is credited to the scheme rather than retained by the AMC. The 0.30 percentage point gap between the two plans is the distribution cost carried by the regular plan, as regular versus direct plan explains. PPFAS’s own exit loads across its seven schemes are compared in PPFAS exit load structure .

Plans, options and IDCW

The scheme offers a direct plan and a regular plan, each with a growth option and an income distribution cum capital withdrawal (IDCW) option. The IDCW option runs monthly, with a payout and a reinvestment facility and a record date on the last Monday of each month. The defaults in the SID are the direct plan, the growth option and monthly IDCW reinvestment, and any IDCW payout below Rs 500 is reinvested compulsorily.

Distributions have been irregular. The direct plan paid Rs 0.1158 a unit for the record date of 29 June 2026 and Rs 0.0413 for 27 July 2026, and nothing for 25 May, 31 August or 28 September 2026, according to the factsheet’s dividend history. PPFAS insiders held Rs 37.35 crore in the scheme on 30 September 2026.

The SID lists systematic investment , systematic transfer and systematic withdrawal plans, and transactions through the MF Central platform run by CAMS and KFintech; MF Utility is the industry’s other shared transaction platform.

Place in the balanced advantage category

The Parag Parikh Dynamic Asset Allocation Fund held 0.80 per cent of the money in its SEBI category on 30 September 2026. AMFI’s monthly report for September 2026 counts 36 Balanced Advantage Fund or Dynamic Asset Allocation schemes with Rs 3,15,741.41 crore of assets and 57,74,112 folios, and a net outflow of Rs 912.43 crore in the month.

Table: hybrid scheme categories, September 2026. Source: AMFI Monthly Report for September 2026. Ordered by net assets by webnotes.in.

The PPFAS scheme’s tax position is the main structural difference from its peers, most of which Business Today described as equity-oriented in its report of 20 February 2024. A balanced advantage fund that keeps gross equity at 65 per cent or more, using arbitrage to bring net equity down, gives its investors equity taxation after 12 months; the PPFAS scheme gives up that treatment and holds far more debt. PPFAS DAAF versus other balanced advantage funds and BAF versus aggressive hybrid compare the designs.

Comparison with other PPFAS hybrid schemes

PPFAS runs three schemes that mix equity with debt or hedged positions, and each falls in a different tax category. The Dynamic Asset Allocation Fund sits between the other two.

Table: PPFAS hybrid and arbitrage schemes. Sources: PPFAS Tax Reckoner 2026-27; PPFAS factsheet, September 2026; amc.ppfas.com scheme pages; SEBI Master Circular for Mutual Funds of 20 March 2026, paragraph 3.8.3.

PPFAS Conservative Hybrid Fund taxation and PPFAS Arbitrage Fund taxation cover the other two schemes. PPFAS tax-aware portfolio management covers how the AMC uses the three tax categories.

Redemption, NAV and grievances

The SID commits PPFAS to transfer redemption proceeds within three working days, or five working days in exceptional circumstances, and IDCW within seven working days of the record date. For a delay the AMC pays interest at 15 per cent a year. The NAV of each plan and option is published on amc.ppfas.com and the AMFI website by 11 pm on every business day, and transactions are priced under the applicable NAV rules.

A complaint goes first to PPFAS Asset Management through the investor services and grievance redressal pages on amc.ppfas.com. An unresolved complaint can be escalated to SEBI through SCORES , whose second version gives the regulated entity 21 calendar days to respond before review.

Corrections to earlier versions of this entry

Earlier versions of this page, and several neighbouring pages, carried details that the scheme documents contradict. This table records them so that the corrected figures can be checked against the source.

See also

• PPFAS Mutual Fund
• PPFAS Asset Management Private Limited
• Parag Parikh Flexi Cap Fund
• Parag Parikh Conservative Hybrid Fund
• Parag Parikh Arbitrage Fund
• Parag Parikh Liquid Fund
• Parag Parikh ELSS Tax Saver Fund
• Parag Parikh Large Cap Fund
• PPFAS DAAF versus other balanced advantage funds
• PPFAS scheme launch timeline 2013 to 2026
• PPFAS history from 1979
• PPFAS exit load structure
• PPFAS minimum investments per scheme
• PPFAS TER history per scheme
• PPFAS tax-aware portfolio management
• PPFAS Conservative Hybrid Fund taxation
• PPFAS Arbitrage Fund taxation
• Parag Parikh
• Neil Parikh
• Rajeev Thakkar
• Raunak Onkar
• Raj Mehta
• Rukun Tarachandani
• Tejas Soman
• Mansi Kariya
• Balanced advantage fund in India
• BAF versus aggressive hybrid
• Aggressive hybrid mutual fund
• Conservative hybrid mutual fund
• Equity savings mutual fund
• Arbitrage mutual fund in India
• REIT and InvIT exposure cap for mutual funds
• Real estate investment trust
• Hybrid mutual fund taxation
• Capital gains tax in India
• Income-tax Act 2025
• Debt mutual fund taxation 2023
• Debt MF indexation removal 2023
• Securities transaction tax
• SEBI
• SEBI Master Circular for Mutual Funds 2026
• SEBI (Mutual Funds) Regulations 2026
• SEBI scheme rationalisation circular 2017
• AMFI
• AMFI monthly AUM data
• Mutual fund TER in India
• Regular versus direct plan
• Direct plan adoption in India
• IDCW
• New fund offer
• SIP in mutual funds
• STP in mutual funds
• SWP in mutual funds
• Mutual fund NAV computation
• Applicable NAV
• Sharpe ratio
• Rolling versus trailing returns
• CAMS
• MF Central
• MF Utility
• SCORES mutual fund complaints
• Nifty 50

External references

• PPFAS Mutual Fund, Parag Parikh Dynamic Asset Allocation Fund scheme page: https://amc.ppfas.com/schemes/parag-parikh-dynamic-asset-allocation-fund/
• PPFAS Mutual Fund, KIM, SID and SAI downloads: https://amc.ppfas.com/downloads/kim-sid-and-sai/
• PPFAS Mutual Fund, monthly factsheets: https://amc.ppfas.com/downloads/factsheet/
• PPFAS Mutual Fund, Tax Reckoner 2026-27: https://amc.ppfas.com/schemes/Tax_Reckoner_2026-27.pdf
• SEBI, Master Circular for Mutual Funds, 20 March 2026: https://www.sebi.gov.in/legal/master-circulars/mar-2026/master-circular-for-mutual-funds_100491.html
• AMFI, Monthly Report for September 2026: https://portal.amfiindia.com/spages/amsep2026repo.pdf

References

1. PPFAS Asset Management Private Limited, Scheme Information Document, Parag Parikh Dynamic Asset Allocation Fund, dated 28 November 2025. https://amc.ppfas.com/downloads/parag-parikh-dynamic-asset-allocation-fund/sid-parag-parikh-dynamic-asset-allocation-fund.pdf
2. PPFAS Asset Management Private Limited, Key Information Memorandum, Parag Parikh Dynamic Asset Allocation Fund, dated 27 November 2025.
3. PPFAS Mutual Fund, Factsheet for September 2026, pages 12 to 16. https://amc.ppfas.com/downloads/factsheet/2026/ppfas-mf-factsheet-for-September-2026.pdf
4. PPFAS Asset Management Private Limited, Notice cum Addendum, change in the SIDs of the schemes of PPFAS Mutual Fund on reclassification of REITs, 24 December 2025. https://amc.ppfas.com/downloads/addendum/2025/Notice-cum-Addendum-on-REIT.pdf
5. PPFAS Mutual Fund, Tax Reckoner 2026-27, updated as per the Finance Act 2026. https://amc.ppfas.com/schemes/Tax_Reckoner_2026-27.pdf
6. SEBI, Master Circular for Mutual Funds, HO/24/13/11(1)2026-IMD-POD-1/I/7602/2026, 20 March 2026, paragraph 3.8.3. https://www.sebi.gov.in/sebi_data/attachdocs/mar-2026/1774024028162.pdf
7. SEBI, Categorization and Rationalization of Mutual Fund Schemes, SEBI/HO/IMD/DF3/CIR/P/2017/114, 6 October 2017.
8. AMFI, Monthly Report for the month of September 2026. https://portal.amfiindia.com/spages/amsep2026repo.pdf
9. Income-tax Act 2025 (Act 30 of 2025), sections 2(101), 76, 196, 197, 198 and 393. https://egazette.gov.in/WriteReadData/2025/265620.pdf
10. Business Today, “New Fund Offer: PPFAS MF launches Dynamic Asset Allocation Fund”, 20 February 2024. https://www.businesstoday.in/mutual-funds/story/new-fund-offer-ppfas-mf-launches-dynamic-asset-allocation-fund-check-scheme-investment-details-418192-2024-02-20