Skip to main content

What are Multi Asset Mutual Funds?

Buy Gold Mutual Funds

Invest Mutual Funds Online

Download Mutual Fund Application Forms

Call 0 94 8300 8300 (India)

Multi-asset funds are in vogue these days. Riding on the back of the spectacular performance of gold in the past few years, eight mutual fund houses have come out with schemes that will invest in gold along with other asset classes. Quantum AMC too has come out with Quantum Multi Asset Fund in June 2012. Morgan Stanley Multi Asset Plan, launched in January this year, has declared its maiden dividend last fortnight. But as fund houses come out with multiple combinations of equity, debt and gold, the choice becomes difficult for investors. To avoid confusion, first clearly define your financial goals and then understand the investment objective of the scheme. Your goals and scheme objective must match, otherwise the schemes need not deliver as per your expectations.


There are primarily three types of funds.

 

The first type of funds comprises financial planning schemes. Let's take the case of ING Financial Planning Fund. These are schemes that invest in equity, gold and debt directly, or the units of mutual fund schemes investing in these asset classes in a pre-determined proportion, depending on the risk appetite of the individual. For example in ING Financial Planning Fund – Aggressive Plan, the fund manager can invest 63-77% of the portfolio in equity funds, 4.25-14.5% in gold exchange traded funds (ETFs) and the rest in money market securities, liquid funds and other debt funds. You can choose between options such as aggressive, prudent or conservative, depending on your risk profile.


The second type of funds is multi-asset funds with specified limits on allocation to each of the asset classes. For example, in case of Quantum Multi Asset Fund, the fund manager can invest 25-65% of the portfolio in equities, 25-65% in debt and 10-20% in gold funds.


The fund manager decides the allocation of each of the asset class, taking into account various parameters such as valuations and macro-economic factors. Axis Triple Advantage Fund is another fund which offers to invest 30-40% in both equity and debt and 20-30% of the money in gold ETFs. Such funds are expected to bring in moderate capital appreciation by investing across asset classes and rebalancing the portfolio at regular intervals.


The third type of funds is monthly income plans (MIPs). It is similar to traditional MIPs that aim to come out with a monthly payout but does not guarantee it. The only difference is these funds invest in gold in addition to debt and equity against traditional mutual fund MIPs investing in a mix of debt and equity. Taurus MIP Advantage and Religare MIP Plus fall in this category with exposure to gold. Typically, the investments in gold and equity are minimal to cap the risk. We invest around 80% of money in fixed income which offers consistent returns; while the rest, which is invested in gold and equity, is actively managed. The inverse relationship between gold and equity should ideally ensure that the portfolio returns are enhanced in most time periods.

Should You Invest?

The idea of investing across investment classes look appealing and you may think that will address your problem of diversification of the portfolio and asset allocation. But that need not be the case always.


If you don't know how to do it yourself, multi-asset funds meant for financial planning are a good option, as both asset allocation and asset rebalancing are taken care of. You can choose to invest through a systematic investment plan in these schemes. These funds are expected to deliver only in the long term.


Since most of these funds have limited history, you should ideally wait and observe the fund management strategy and its performance to decide if such funds can be included in the portfolio. In some cases, actively-managed funds in this category can be good candidates for satellite portfolios. Axis Triple Advantage Fund has delivered 10.22% returns over the past one year. Kotak Multi Asset Allocation Fund has delivered 8.52% returns in one year. The rest of the schemes are yet to complete one year.


Along with individuals with income needs, individuals who want to strictly limit their exposures to risky assets, such as equity and gold, and invest for the long term can consider MIPs. If you fall in the former segment of investors, go for the dividend option and if you are from the later segment opt for the growth option. Taurus MIP Advantage and Religare MIP Plus have given 10.21% and 9.12% returns in one year. These returns are higher than 6.70% delivered by hybird debt-oriented conservative funds, that captured most traditional MIPs, says Value Research, a mutual fund tracking entity.

The Downside

These funds are taxed like debt funds and hence offer low post-tax returns. Gold is no more a 'safe' asset given the high volatility in prices. Clubbing two risky assets – equity and gold – with debt need not be a low-risk investment strategy. Not many investors can digest volatile returns if fund managers cannot manage the risk. It is better to think for a while and if convinced, take exposure through systematic investment plans.

Happy Investing!!

 

We can help. Call 0 94 8300 8300 (India)

 

Leave your comment with mail ID and we will answer them

                        OR

You can write back to us at prajnacapital [at] gmail [dot] com

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

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds        Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds     Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds    Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds             Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds              Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Gold Mutual Funds             Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...
Read more

How much to invest in gold ?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Let your motivation dictate the share of the yellow metal in your portfolio Enough has been said and written about gold as an investment option. The latest argument is that the craze for gold among Indian households is endangering our country's balance of payments. The policymakers are busy trying to find ways of discouraging investment in gold, but if households keep the common good in mind, they would be paying the market price for gas cylinders as they do for, say, their mobile phone bills. After all, private decisions are driven by private motives. So, how should a household look at gold from its own perspective? Gold is primarily acquired for its merit as a store of value. Even if the worst crisis hits a family, the gold that it holds could be put to use anywhere in th...
Read more

Time-tested methods to pick a good mutual fund

Proper understanding of a fund is important as it enables investors to keep a tab on its actual performance THERE are various types of mutual funds and one way of segregating them is on the basis of active or passive management. Th is makes the understanding of the nature of the fund easy for a lot of investors, as it shows the basis on which investment decisions will be made. Some funds also have a mixture of both active and passive management. Su ch funds need to be considered carefully if they are to be selected as an investment avenue. Here is a look at the manner in which such funds operate and its impact on decision-making. Mixture : The selection of the portfolio of an equity oriented mutual fund can be done in an active manner. The fund manager can take the decision about which stocks should be bought and sold by the fund. On the other hand, there can be a passive fund where the decision making is not in the hands of the fund manager as a specific index is followed for...
Read more

Save Tax With Mutual Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300       Mutual funds are ideal as long term investment avenues for retail investors. To encourage investments in this avenue, the Government of India offers investors a spate of tax benefits thus ensuring maximum benefit from mutual funds held beyond a year. Sample some of the key benefits and refer to the table for a detailed list of tax rates for different types of schemes ·        Avail deductions under Sec 80C of the Income Tax Act by investing up to a maximum of Rs. 1 lakh in designated Equity Linked Savings Schemes (ELSS). Such investments have a compulsory lock in period of 3 years. ·        First time retail investors in equity with a gross total income of up to Rs. 12 lakh can invest up to Rs. 50,000 in specific MF schemes un...
Read more

Diversification is key to gain more

Even those who prefer debt for its safety are looking at more options    It is not often that you find more than a couple of asset classes producing good returns at the same time. Invariably, assets such as gold and equity don't perform in tandem, and hence it was easier to allocate to them in line with the risk profile of the investors. In the last couple of quarters, however, more than one asset has turned attractive - gold, debt and equity. In line with the trend, you even have monthly income plans with a combination of more than two assets.    In the past, those who stuck to debt were a different class of investors who didn't wish to take risk with their money. The changing lifecycles and the growing integration of investment markets across the globe have pushed even individual investors to embrace the concept of asset allocation. Hence, you have individuals who were using debt to park profits being prepared to take advantage of other assets.    For instance, when the...
Read more
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