Should you invest in multi-asset mutual fund schemes or diversify on your own?

economictimes.indiatimes.com:

strategies are the shiny new toys in the investment arena. Asset management companies are making a fervent pitch to investors to put their money in multi-asset allocation funds. Most recently, Edelweiss Mutual Fund and WhiteOak Capital Mutual Fund have introduced their offerings in this space.

Three more AMCs—Bank of India Mutual Fund, Kotak Mutual Fund and Shriram Mutual Fund—are lining up variants under this category. This sudden push for multi-asset strategies is not coincidental. From 1 April 2023, debt funds, gold funds and international funds have lost their earlier taxation benefits.

Mutual funds are offering multi-asset funds as a more tax-friendly alternative to take exposure to the same asset classes. Let’s explore what these funds have to offer and if you should buy into the new sales pitch.What is the big deal? Multi-asset funds have been formally identified as a separate fund category only since 2018. These are a form of hybrid fund, but distinguished from traditional debt-equity hybrid funds and dynamic asset allocation or balanced advantage funds.

Multi-asset allocation funds invest in at least three asset classes, with a minimum allocation of at least 10% to each. The typical asset mix of a multi-asset fund comprises domestic equities, debt and gold. There are variants that also invest in international equities, silver and REITs.

The basic premise of a multi-asset fund is to allow investors access to multiple asset classes under one roof without worrying about asset allocation and rebalancing on their own. For many, choosing the optimal asset mix can be intimidating. Selecting the right instruments within each asset type can also be a hassle.