Dynamic asset allocation funds invest in debt and equity instruments based on predefined indicators of the market, such as the PE ratio. The PE ratio is the Price Earnings, which is the investors ' most important valuation tool. In dynamic asset allocation, if a broader index like S&P BSE 100's PE ratio exceeds a certain level, the scheme would sell a portion of its equity portfolio and increase the portion of its debt securities investment. One of these funds ' key advantages is that they manage risk very well. They invest in various assets, such as equity and debt, to reduce the risk. What makes flexible asset allocation strategies special from traditional debt or equity programs is that they are not required to remain invested in a single asset class, they may dynamically rebalance their portfolio according to the market scenario.