MUTUAL FUNDS: Multi-asset funds for lower drawdowns
As the markets near their all-time highs and investors become wary, asset management companies are launching multi-asset funds. Investing in these low-correlated funds can safeguard the portfolio from drawdown and inflation risk, helps in diversification and get better risk-adjusted returns.
These hybrid funds invest in at least three asset classes — equity, debt and gold—with a minimum allocation of 10% to each and are taxed at lower rates. Fund managers can strategically adjust the allocation to optimise returns and manage risk effectively. By doing so, multi-asset funds offer investors a more stable and less volatile investment journey.
This month, two fund houses have launched multi-asset funds. Subscription for the new fund offer of DSP Multi Asset Allocation Fund (MMAF) will close on September 21 and that of Kotak MAAF will close on September 14. Subscription for Shriram MF’s MAAF closed on September 1. At present there are 13 such funds in the market, out of which three were launched this year. The launch of multi-asset funds addresses the evolving preferences of retail investors for hassle-free, diversified, and professionally managed investment options.
Harshad Chetanwala, co-founder, MyWealthGrowth.com, says this strategy gives complete freedom to the fund management team to decide on ideal allocation based on the environment. “Like balanced advantage funds, these funds are preferred by investors who want to invest across different asset classes along with gold, international equity and REITs in some cases. At the same time, the fund managers take the call on the portfolio and weightage across asset classes which can give some more comfort to a segment of investors,” he says.
The fund managers have the option
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