Banking Mantra

Mutual Fund Investment Strategy: The ‘AUM’ Framework

01 Oct 2026

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Mutual Fund Investment Strategy

Core Strategy: The 'AUM' Framework

A — Asset Allocation First

Buffer interim volatility by shifting away from pure single-asset concentration toward hybrid and multi-asset models.

U — Unconstrained Stock Selection

Prioritize Flexi-cap and Multi-cap funds over rigid market-cap buckets to let fund managers tactically navigate large vs. mid/small cap valuation divergences.

M — Moderate Return Expectation Management

Focus on risk-adjusted alpha, drawdown protection, and yield enhancement rather than chasing momentum.

Mutual Fund Portfolio Allocation Matrix (Moderate-to-Growth Profile)

Strategy Bucket Recommended Fund Category Target Weight Objective & Role
Core Equity Flexi Cap / Large & Mid Cap Funds 35% – 40% Structural compounding across market cycles
Dynamic / Hybrid Multi-Asset Allocation / Balanced Advantage 25% – 30% Automated asset rebalancing (Equity + Debt + Gold)
Fixed Income & Stability Short Duration / Banking & PSU Debt Funds 20% – 25% Capital preservation, regular accrual, and liquidity
Satellite / Tactical Alpha Sectoral / Thematic / SIFs / Value Funds 10% – 15% Exploiting tactical market dislocations

Disclaimer: This Portfolio framework is an illustrative example designed to explain asset allocation across different mutual fund categories and should not be construed as a recommendation.

Implementation Roadmap

Deploy via STP over 6–9 Months

For lump-sum capital, park funds in Liquid or Ultra-Short Duration funds and execute a Systematic Transfer Plan (STP) into target equity funds to average market entry costs.

Maintain Uninterrupted SIPs

Continue disciplined monthly SIP allocations to capture rupee-cost averaging through headline-driven corrections.

Annual Rebalancing Trigger

Rebalance back to target weights if equity exposure drifts by more than ±5% due to sharp market swings.

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Disclaimer: Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Past performance is not an indicator of future performance. Please consult your financial advisor before taking any decision.

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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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