With gold acting as a safe hedge, multi-asset allocation funds have shown lesser volatility while offering equity-like returns, said Kartik L Jain, MD & CEO, Shriram Asset Management Company.

He was addressing a press conference here on Thursday to announce the launch of a Shriram Multi Asset Allocation Fund. The new fund offer (NFO) will be open on Friday and close on September 1.

Shriram Asset Management Company is part of the Shriram Group. It currently has two funds each under hybrid funds and pure equity funds categories and one debt fund with a total assets under management (AUM) of ₹290 crore.

Multi-asset allocation fund is a category of mutual funds that invests in at least three asset classes including domestic equities, debt and gold with a minimum allocation of at least 10 per cent in each category.

Exposure to gold

Jain said, unlike balanced advantage funds, multi-asset allocation funds have exposure to gold, which gives a hedge against market volatility especially during crisis periods and hence reduces the drawdown (fall from the peak).

The Shriram Multi Asset Allocation Fund will invest between 65-80 per cent of the corpus in equities including 30 to 40 stocks from Shriram AMC’s proprietary Enhanced Quantamental Investment (EQI) model.

Jain said minimum allocation of 65 per cent to equities allows investors in this fund to benefit from Long Term Capital Gains tax of 10 per cent. The fund would also allocate 10-25 per cent of funds in AAA- rated short to medium-term debt, preferably in government and government-backed securities, and 10-25 per cent in gold/silver ETFs with the option to allocate up to 10 per cent in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

The minimum investment amount for lumpsum is ₹5,000 while for SIPs it is ₹1,000 per month or ₹3,000 per quarter. There is no lock-in period involved.