Skip to main content

Multiple-asset mutual fund is not yet tested. Find out If its for you

 

INSTEAD of keeping all eggs in the same basket, keeping different eggs in different baskets reduces risk

THE more the merrier or so the adage goes. But does it hold true for mutual funds that simultaneously invest in stocks, bonds and gold?


Financial experts point out that while investors need to look at diversification, they should not over-diversify so that the share of asset allocation for stocks, bonds or gold does not stray from their pre-decided levels.

Here are the pros and cons of investing in a multiasset mutual fund: Multiple play: Schemes, such as ING Optimix Financial Planning, Peerless MF Child, Fidelity India Children's Marriage, Kotak Multi Asset Allocation, Axis Triple Advantage, Taurus MIP Advantage and Religare MIP Plus, are hybrid funds that combine three asset classes. Depending on the fund's intent, some schemes are heavily tilted towards gold, while some others are heavily biased towards debt or stocks.

For an investor, these funds are just a convenient tool. Instead of keeping all eggs in the same basket, one can keep different eggs in different baskets. That reduces risk. But, in reality, investors are usually too lazy to do that. They will prefer a grocery-store approach, where if the same fund is giving them exposure to different asset classes, that's convenient for them.


Check performance: Most of these funds have been launched in the past 12 months. So, no measure of long-term performance is available. It is important that investment in any fund, not just any special class, stands the test of time -a minimum three to five years have to pass to get a realistic view.

Of course, one can miss out on any upside in a rookie fund, but that's a risk. Any new fund offer (NFO) is like a trainee in a company. They may have potential but lack any record. These multi-asset funds are good idea, but we think its better to monitor the performance for some time before jumping in. An 8 per cent return in a volatile situation may sound good when compared with tax-adjusted returns of fixed deposits.

Long-term attraction: For children funds, the reasoning for addition of gold into these schemes is a hedge against possible rise in gold price. But, one can do by just investing in gold ETFs too. But a one-stop solution sounds attractive. The thing is such schemes allocate portions of your money into the assets. So, if you want to buy Rs 1 lakh of gold now, its better to go for gold ETFs. If you want to distribute the same Rs 1 lakh over different assets, then multi-asset schemes are good. Some companies appoint different managers to oversee different assets. This is good because an expert in stocks cannot take the right decisions on debt or even gold.

 

-----------------------------------------------------------------

 

Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

 

 

 

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now