Introduced late last year, the Future Goal series provide investors with unique life-stage investment solutions to meet their future requirements. Mr Sanjay Sachdev, managing director and chief executive officer of IDBI-Principal, explains that the plan is based on the concept of asset allocation, which allows one to own several funds with different investment objectives identified by one depending on one's life-stage.

The rationale is that the risk profile changes at every stage. A 25-year-old, for example, can afford to take a greater risk with an eye on capital appreciation while a 60-year-old would prefer investments with regular income.

``Clearly, the focus is to assess what proportions of different assets work together most efficiently to achieve the best yield for individuals at levels of risk they are comfortable with,'' points out Mr Sachdev. It's this aspect that makes the programme personalised a good deal.

But how does one arrive at the right mix? For that there are some key questions that the investor needs to answer for himself to ascertain his risk tolerance profile: What is the expected investment time frame for the unit-holder? What is the type of return the investor seeks and, of course, the level of risk he is willing to undertake.

Based on the risk profile the investor can decide on the schemes he wants to opt for. IDBI-Principal has designed four schemes for the purpose. You have a Growth Fund targeted at those looking for higher returns with matching risk by investing in equities. Then there is a Balanced Fund suited for investors who seek long-term growth and do not want to invest solely in equities. As compared to pure growth schemes, they offer more consistent returns. Schemes with a higher exposure to more conservative investments under the Income Fund deal with government securities and are aimed at those looking for stable returns with minimum risk.

All the three investment schemes are available with two options: the dividend and Growth Plan.

However, if you are seeking a very high liquidity with low principal risk, IDBI-Principal has yet another offering-Cash Management Fund. Here, too, the investor can avail of two options, Money at Call option and Liquid option, and will receive daily NAVs as in other funds.

But what really sets the IDBI-Principal schemes apart from others, says Mr Sachdev, is that it allows one to re-balance the portfolio at periodic intervals. The CEO in fact claims that they are the only ones in the country to be offering this facility.

The need to re-balance arises from the fact that different groups of assets grow at varied pace over different time periods, says Mr Sachdev. This is why the AMC would realign the portfolio in case there are changes in the market value of assets causing the value ratio to change course from the originally-stated allocation (See table Re-balancing Rigmarole).

The facility might be unique, but not without tax implications, points out Mr Dhirendra Kumar, CEO of Delhi-based mutual database Value Research. The reallocated portion, if leading to a capital gain, would be taxed as such, he points out. So there are tax implications every time you book a short-term capital gain, agrees another investment consultant with a foreign bank. That is something most investors won't factor in while investing, simply because they are not aware of it.

Mr Kumar in any case is not very impressed with the asset allocation concept simply because it is nothing very different from giving "standing instructions to a bank account for a certain duration."

According to him, it is merely a facilitation on a product which has probably caught the fancy of the investors because of neat packaging. ``The plan is pretty much automated and it is simplistic to assume that you can devise an investment package on the basis of a few questions,'' the expert points out.

Analysts point out yet another blip even while lauding the novel concept of portfolio management on a personalised basis.``IDBI might be offering a diversified portfolio in terms of types of assets but the fact remains that they all belong to one fund manager, IDBI- Principal. That's going against the basic investment rule of never putting all your eggs in one basket, points out the investment consultant with the foreign bank.

While debate might continue over that, Mr Sachdev is quite categorical that there has been a good investor response to their Future Goal series and the funds have mopped up a corpus of over Rs 588 crore during the launch alone which closed on October 21, 2000. That should not be surprising considering large institutions like IDBI have a captive audience to whom they can readily sell their products. Mr Sachdev discloses that the assets under their management have grown from Rs 680 crore in August 2000 to over Rs 1,200 crore, all in a matter of four months. ``Even during these depressed market conditions, the NAVs of all the Future Goal Funds opened above par,'' he adds.

The giant fund manager is in fact planning to launch an innovative child-focussed fund with an insurance element built into it in the near future.