Due to economic uncertainty, rising inflation, high interest rates, and recession fears, investors are seeking multi-asset mutual funds. These funds invest at least 10% in each asset class. A real multi-asset fund has a pre-determined allocation methodology for diversification and stable returns…
In recent months, investors have flocked to multi-asset mutual funds. The reasons are clear. Economic conditions are unpredictable. Rising inflation, high interest rates, and recession looming. Multi-asset funds offer reliable returns in periods like these.
Multi-asset mutual funds invest in stock, debt, and commodities. The fund manager must invest 10% of the corpus in each asset class. Does this make it a multi-asset fund? If the stock markets crash, an 80% equity investment and 10% debt and commodities investment will hurt fund performance.
A real multi-asset mutual fund invests across assets pre-determinedly. A pre-determined asset allocation offers true diversification, therefore asset class allocations should not alter with market conditions. Consider the Nippon India Multi Asset Fund. No other multi-asset fund invests in four asset types in fixed proportions. It invests 50% in India equities (growth), 15% in Debt (relative stability), 15% in Commodities (poor correlation with equities), and 20% in Foreign Equities (global growth). This 50:20:15:15 allocation makes it a true-to-label Multi Asset Fund regardless of market conditions.
Most multi-asset funds like Kotak, UTI, and Tata invest in equities, debt, and commodities without a predetermined allocation strategy.
Financial advisors encourage investors to diversify their portfolio among asset classes to preserve their investments and get good returns during tumultuous periods. They must choose a multi-asset fund that matches its concept.
Conclusion
Due to economic uncertainty, rising inflation, high interest rates, and recession fears, investors are seeking multi-asset mutual funds. The corpus is invested at least 10% in equity, debt, and commodities by these funds. A real multi asset fund invests across assets in a pre-determined manner, ensuring true diversification and maintaining asset class allocations regardless of market conditions. True-to-label multi asset funds invest 50% in India equities, 15% in debt, 15% in commodities, and 20% in overseas equity, such the Nippon India Multi Asset Fund. Many multi asset funds, like Kotak, UTI, and Tata, invest across three asset classes without a predetermined allocation formula. Financial advisers recommend diversifying across asset classes for investment safety and good returns, and choosing a theme-appropriate fund is vital.
