MANY-IN-ONE: WHICH COMBINATION OF ASSETS SUITS YOU?

Six multi-asset allocation funds have been launched this year and more are in the pipeline. Are they right for you?

- Kundan Kishore

Asset allocation has long been considered the fundamental principle of smart investing, but it’s only recently that multi-asset allocation funds have captured the spotlight. Six multi-asset funds have already been launched this year and more are on the horizon, awaiting the regulatory green light.

The recent emergence is not without reason. In 2022, the two critical asset classes—equity and debt—saw tepid returns, and commodities, such as gold proved to be beacons of hope, providing a sanctuary to the investors.

On the equity side, the broader tracked equity indices, Sensex and Nifty, posted lower single-digit returns with 4.44 per cent and 4.32 per cent, respectively, while on the debt side, Crisil Composite Bond index posted merely 2.46 per cent. In comparison, gold gave 14 per cent return over the same period.

With investors noticing immediate gain in assets other than equity and debt, the multi-asset strategy became the flavour of the season, and as expected, mutual funds weren’t left far behind. Multi-assets funds, which can diversify across multiple asset classes such as equity, debt, gold and others, and promised to safeguard investments in unfavorable market conditions became a favourite with investors.

It may be noted that though experts consistently extol the virtues of asset allocation, it’s not always that the strategy catches the fancy of investors.

Rise Of Multi-Asset Funds

In 2020, when the market was going through heightened volatility during the Covid-19 pandemic, three multi-asset schemes—Tata Multi Asset Opp Fund, Motilal Oswal Multi Asset Fund and Nippon India Multi Asset Fund—were launched after a gap of 10 years. Before that, merely six multi-asset funds were in existence.