Comments
Investors have been flocking to multi-asset mutual fund schemes and inflows have jumped substantially on the back of volatile equity markets and growing uncertainty.
Inflows into multi-asset funds have touched ₹14,238 crore so far this fiscal. Investments peaked at ₹6,324 crore in September after the launch of three multi-asset NFOs by DSP MF, Kotak MF and Shriram MF.
The hybrid multi-asset allocation funds invest in a minimum of three asset classes such as equities, debt, and commodities. SEBI mandates that these funds must invest a minimum of 10 per cent of their total AUM in each of the three or more asset classes at all times.
However, most fund managers’ tendency to depend on one asset class can turn out to be a losing proposition for investors.
Dwaipayan Bose, co-founder, Advisor Khoj said SEBI has mandated that multi-asset funds have to invest 10 per cent each in equity, debt and commodities, while the remaining can be invested in any basket.
But, for example, an over-dependence on equity, say 80 per cent and the balance of 10 in each in commodities and debt can be a problem if the equity markets fall suddenly.
Bose said that he feels that in such instances where asset allocation is not fixed, investors stand to lose out since the allocation of 10 per cent each in debt and commodities will not really benefit due to low correlation of asset classes and the investments are not sizable.
For instance, he said Nippon India Multi Asset Fund, which gave a return of 19 per cent in the last one year, invests in four asset classes - Indian equities (50 per cent), overseas equities (20 per cent), commodities (15 per cent) and debt (15 per cent). This investment mix has been held constant since inception to ensure that investors get the true benefits of a multi asset fund.
In the last few weeks, FIIs have reduced their risk exposure due to high US bond yields, the ongoing Israel-Hamas conflict shows no sign of ending soon, crude oil prices are high and if commodity prices continue to rise, gold will continue to shine. Hence it makes sense for investors to look for multi asset funds which are true to label, he said.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.