Every investor while investing wishes to maximise his returns while minimising his risk. Asset Allocation and Superior scheme selection are time tested proven ways for doing the same. But time and again it has been proven that for an investor to manage his asset allocation and select superior schemes is extremely tough and difficult to execute due to operational and behavioural reasons.
MARS (Mutual Fund Automated Portfolio Rebalancing System) tries to overcome these issues for investors whereby they can manage their asset allocation and invest in better performing schemes by the click of a mouse and maximise their returns. As the process is system driven and operationally smooth, it also helps weed out behavioural biases. MARS gives a wide array of portfolios to choose from to the investor based on his risk appetite and periodically triggers portfolio rebalancing based on deviations from the asset allocation of the model portfolio resulting in superior returns to the investor over a period of time.
SALIENT FEATURES OF MARS
The asset allocation rebalancing would be done yearly for Fixed Asset Allocation and half yearly for Dynamic Asset Allocation. The scheme changes for both fixed, Dynamic and balanced portfolios are done once in a year. Scheme changes for SIP portfolio are done only after completion of 5 years. There is no rebalnacing however in ELSS or SIP potfolios, but a new portfolio is released for investment every year in both the categories.
BENEFITS OF MARS
HOW CAN CLIENT INVEST IN MARS PORTFOLIOS?
WHAT IS ASSET ALLOCATION
Asset Allocation, simply means, investing money across asset classes, namely equities, bonds and cash. It is the key ingredient for any investor wanting to create wealth in the long term. Asset allocation is also important because different asset classes, due to their inherent nature, behave differently. Equity, which represents ownership in a business or enterprise, is volatile in nature and tends to go up and down in the short term. On the other hand, debt, which represents lending money to a business or enterprise, is relatively more stable and provides regular income in the form of interest. Diversifying the client's investments across different asset classes will result in diversifying the investment risk and create a well balanced portfolio that can offset the impact of market volatility.
PORTFOLIO REBALANCING
Values of individual asset classes can go up and down in line with the underlying market movements. While this is no reason for the client to panic, it is important for the client to review his initial asset allocation with the current asset allocation and make course correction through portfolio rebalancing. Portfolio rebalancing will ensure that the client sells equity when markets are expensive and incrases equity allocation when markets are cheap.
HOW TO DETERMINE THE BEST ASSET ALLOCATION
Asset classes vary on the basis of their average returns and volatility. Equities have the potential to give higher returns but the volatility of the returns is also high. Debt is relatively more stable with annual coupon payments.
The best approach to asset allocation is to find out the risk appetite of each client. The greater the appetite for risk, the larger the share of the portfolio that can be allocated to equities.
Risk appetite may differ from individual to individual based on his investment horizon, his ability to bear loss, current financial status, current job status, social background etc. These are some of the factors affecting risk appetite for any investor. The NJ partner is equipped with tools like AIS (Automated Investment Solutions) through which he can determine the right asset allocation for the client based on his understanding of all these factors.
1. Dynamic Asset Allocation Portfolios
3 Portfolios are available under this category
| Portfolio Name | Equity Allocation Range | Debt Allocation Range |
| DAA – Aggressive | 0% - 100% | 0% - 100% |
| DAA – Moderate | 0% - 60% | 40% - 100% |
| DAA – Conservative | 0% - 30% | 70% - 100% |
The Asset Allocation Model made by NJ research team determines the Asset Allocation of all the above portfolios. For Example - Based on the current market, if the model shows Equity Allocation of 80%, the Equity allocation in DAA Aggressive Portfolio will be 80%, in moderate it will be 48% (80% of 60%) and in conservative portfolio it will be 24% (80% of 30%). The remaining money will be invested in Debt/Arbitrage Funds. The Equity portion will be split in 5 schemes selected by NJ research team. So, if the Equity allocation is 80% in DAA Aggressive, each scheme will get an allocation of 16%. The scheme changes are made once every year in the month of April, where non performing schemes are weeded out of the portfolio and replaced by other schemes.
2. Fixed Asset Allocation portfolios
There are 10 portfolios in this category. As the name suggests the Equity and Debt componenet of each portfolio is fixed and not dependant on market movement.
| Portfolio Name | Equity Allocation | Debt Allocation |
| FAA – E10 | 10% | 90% |
| FAA – E20 | 20% | 80% |
| FAA – E30 | 30% | 70% |
| FAA – E40 | 40% | 60% |
| FAA – E50 | 50% | 50% |
| FAA – E60 | 60% | 40% |
| FAA – E70 | 70% | 30% |
| FAA – E80 | 80% | 20% |
| FAA – E90 | 90% | 10% |
| FAA – E100 | 100% | 0% |
The Asset Allocation rebalancing in these portfolios is done once in a year in the month of April where it is reset to the model portfolio. For example – If you had invested in E 50 portfolio, where 50% of your money was invested in Equity and 50% in Debt. During the course of the year, if Equity market gave good returns and now your Equity portion has gone upto 60%, system will rebalance your portfolio back to 50% Equity by switching 10% from Equity to Debt thereby booking your profits. The scheme selection for FAA portfolios is done in the same way as dynamic portfolios. The 5 Equity schemes will be common across all portfolios and their prportion would vary based on the Equity allocation of the portfolios. For Example, E 100 portfolio will have 20% allocation into 5 Equity schemes whereas in E 70, the allocation to each Equity scheme will be 14% and remaining portion will be invested in Debt schemes.
3. MARS SIP Portfolios
a) SIP Aggressive Portfolio
This portfolio invests in a mixture of small and mid cap funds. As the name suggests, the volatility in this portfolio will be higher as mid and small cap funds tend to sway higher with the market movements. But, due to this high volatility the investors are able to generate higher returns over long term as they tend to buy higher units when markets fall sharply.
b) SIP Diversified Portfolios
The schemes in this portfolio are a mix of Diversified, Large cap and Mid cap funds. This portfolio is exact replica of E100 portfolio. As the portfolio is more diversified in nature, the relative volatility in it is much lower than SIP aggressive portfolio.
The SIPs in MARS SIP portfolio continue for 5 years and the scheme change happens only at the end of 5 years of the portfolio. However, a new portfolio is released every year for new investors. For Ex – If you have started an SIP in 2019 in MARS SIP portfolios, the changes in your SIP schemes will only be made in 2024. The SIP portfolio for 2020 and 2021 however may have schemes which are different from 2019 portfolio. A new investor investing in 2020 will get different schemes for SIP than an investor in 2019.
4. MARS ELSS Portfolio
MARS ELSS portfolio invests in blend of best performing ELSS schemes. As money is invested in ELSS, it is locked in for 3 years. There is no rebalancing done in this portfolio. At the end of the 3 years, the investor may chose to continue to remain invested or switch this money into any other MARS portfolio of his choice. A new portfolio series is launched every year with different set of ELSS schemes. So MARS ELSS portfolio of 2020 will differ from MARS ELSS portfolio 2019.
5. MARS Balanced Portfolio
MARS Balanced Portfolio invests in Best performing Balanced funds. As balanced funds invest only upto 65% into Equity, the MARS balanced portfolio, due to it's underlying schemes is having an Asset allocation of 65-35. The benefit is that there are no debt/arbitrage funds in this portfolio and all funds in this portfolio get Equity taxation. The scheme change in this portfolio is done once in a year like FAA portfolios.
MARS portfolios have delivered superior performance over the years with a very low volatility based on the robust asset allocation model and superior selection of schemes. For details on latest MARS Performance, visit MARS performance section on E Sathi.
What is MARS?
MARS stands for Mutual Funds Automated Portfolio Rebalancing System. It is an asset allocation and scheme selection tool that is being offered to NJ Partners and their clients. Depending on the risk appetite and goals of the client, the partner and client can choose from a wide range of portfolios available in MARS. The tool will provide regular reminders to the partner and client for maintaining the asset allocation and change underlying schemes periodically based on research done by NJ team. The client will need to authorise the transactions for the relevant changes to take effect.
What are di fferent portfolio strategies o ffered under MARS?
MARS off ers the following 2 portfolio categories
Under Dynamic Asset Allocation, the following portfolios are being offered to partners:
| Portfolio Name | Equity Allocation Range | Debt Allocation Range |
| DAA – Aggressive | 0% - 100% | 0% - 100% |
| DAA – Moderate | 0% - 60% | 40% - 100% |
| DAA – Conservative | 0% - 30% | 70% - 100% |
Under Fixed Asset Allocation, Portfolios are available from 10% Equity Allocation to 100% Equity Allocation.
ACCOUNT OPENING
What is the minimum amount for opening MARS account ? What is the minimum top up amount?
Minimum amount for opening a MARS A/c is Rs. 1 Lac. The minimum investment for top up is Rs. 10,000.
Does a client need to open a new TADA account for MARS?
No, a client does not need to open a separate TADA account for MARS. He can avail the facility from his existing TADA account only.
Can a client avail the MARS facility without opening a TADA account
No, having a TADA account is compulsory as all the transactions will be routed through the stock exchange platform
MODES OF INVESTING
What are modes for investing into MARS?
The client can invest through cheque, net-banking, debit card, auto debit mandate or by transferring his existing MF portfolio into MARS. Client cannot transfer his stock portfolio into MARS.
Which schemes are restricted for transfer to MARS a/c?
FMPs, closed ended equity funds, ELSS schemes (units under lock-in) and schemes having pledge units will not be transferred to the MARS a/c.
Which schemes will get automatically transferred to MARS account?
All the schemes in your existing portfolio which are also part of MARS portfolio, will automatically get transferred to your MARS.
For e.g. A Client wishes to transfer some of his existing investments to MARS portfolio. He has investments in HDFC Equity Fund, Reliance Growth Fund and Birla Top 100 Fund. Assuming MARS portfolio also has Birla Top 100 Fund, his total holding in Birla Top 100 will automatically get transferred to MARS portfolio. Of the remaining funds, the client may choose to select any, all or none of the funds to be transferred to MARS.
MISCELLANEOUS
Is there any lock-in in MARS?
MARS is an asset allocation and scheme selection tool. All the schemes in MARS are open-ended, hence there is no lock-in for the client. The client can buy / sell any scheme in his MARS portfolios subject to the exit load charged by the scheme.
What is the subscription fees for MARS?
As an introductory off er, the MARS a/c is currently free of cost to the client. However, nominal fees may be introduced later for the client. The only charge to the client is the transaction charge on the exchange platform, which is decided between the partner and the client at the time of TADA a/c opening. These charges are any way applicable to the client with or without MARS. There are no other charges in MARS.
Can a client open multiple TADA a/cs for di erent MARS portfolios?
No, the client cannot open multiple TADA accounts with the same holding pattern.
Can the partner select or change schemes in the MARS portfolio?
The MARS portfolio schemes are short-listed by the NJ research team. The partner cannot change the underlying schemes in the MARS portfolios.
PORTFOLIO SWITCH
Can the client switch from one MARS portfolio to the other ?
Yes, the client can switch from one portfolio to another. However, only one switch can be done in a calendar year.
Will there be any charges on the switch from one portfolio to another?
There are no charges for the portfolio switch currently. Normal transaction charges on exchange platform will apply as per agreement between client and partner.
PORTFOLIO REBALANCING
When will the Portfolio Rebalancing happen ?
The Asset Allocation rebalancing for Dynamic Portfolios will happen on a quarterly basis and for Fixed AA portfolios will happen on a yearly basis in January of every calendar year. The portfolio change will happen every alternate year according to investment series. For e.g. - For all investments made in 2014, the scheme change will happen in Jan 2016 and for investments made in 2015, the scheme rebalancing will happen in Jan 2017.
What are modes available to the client for authorising portfolio rebalancing?
The client can avail of the following modes:
How will the client and partner come to know about the schedule of rebalancing or asset allocation change?
The partner and client will be sent an SMS and email on the fi rst day of the rebalancing schedule. The authorisation window will be open for the client for 15 days. During this period, client will get regular reminders till the time he authorises the transactions.
The client has forgotten to authorise the rebalancing transaction during the prescribed time. What should he do now?
In case the client has failed to authorise the rebalancing transactions, he will have to wait for the next rebalancing cycle for the auto change in his portfolio. However, the client always has the option of changing his portfolio himself by selling / purchasing / switching the schemes. None of the underlying schemes in MARS have any lock-in.
Can a partner authorise the transactions on behalf of the client?
No, a partner can not authorise on behalf of the client.
CLOSURE
Client wants to discontinue his MARS account. What does he need to do ?
In case the client wants to discontinue the MARS service, he needs to intimate the partner for the same. The partner can then unmap the client from MARS service through Partner desk. The Client will stop getting any future alerts for rebalancing on his portfolio.
If a client redeems his entire MARS portfolio, does he automatically get unmapped from MARS?
No, the client is not unmapped from the MARS platform. He continues to a part of MARS. If he wishes to invest more money, the minimum investment amount will be Rs. 1 lac.
Can a client do partial redemption in MARS?
Yes, the client can do a partial redemption in MARS. The redemption amount will be proportionately redeem from all the schemes as per their asset allocation.
OTHER QUESTIONS
Can a client do a SIP in MARS?
SIP option in MARS will be launched shortly
Will the client have to bear additional tax burden due to investment in MARS ?
The scheme rebalancing in MARS will happen once in 2 years, so any scheme changes on the Equity side will not attract any tax as the same will fall in LTCG. The Asset Allocation rebalancing may attract minuscule tax on account of STCG in Equity and Debt based on market fluctuations. However, the cost of such tax will be minimal and should get largely offset by the overall additional returns generated through AA rebalancing.
Can an NRI invest through MARS?
No, NRI cannot invest through MARS
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Risk Factors – Investments in Mutual Funds are subject to Market Risks. Read all scheme related documents carefully before investing. Mutual Fund Schemes do not assure or guarantee any returns. Past performances of any Mutual Fund Scheme may or may not be sustained in future. There is no guarantee that the investment objective of any suggested scheme shall be achieved. All existing and prospective investors are advised to check and evaluate the Exit loads and other cost structure (TER) applicable at the time of making the investment before finalizing on any investment decision for Mutual Funds schemes. We deal in Regular Plans only for Mutual Fund Schemes and earn a Trailing Commission on client investments. Disclosure For Commission earnings is made to clients at the time of investments.
AMFI Registered Mutual Fund Distributor – ARN-38097 | Date of initial registration ARN – 29-Dec-2007 | Current validity of ARN – 28-Dec-2025
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