Investing In Assets In A Predetermined Manner

A true multi-asset mutual fund is one that invests across all assets in a ‘predetermined’ manner. In the last one year, multi asset funds of SBI, Tata and HDFC gave returns of 18.53 per cent, 18.18 per cent and 16.23 per cent, while Nippon India Multi Asset Fund gave returns of 18.54 per cent. Financial planning experts advise investors that they need to diversify their portfolio across asset classes so that even in times of ups and downs, their investments are not only safe but they also get good returns. Also, while choosing a multi asset fund, they should invest in a fund that really suits its theme.

Ratio Of Asset Classes As Per Market Conditions

Dwaipayan Bose, co-founder, Advisor Khoj, says pre-determined asset allocation ensures true diversification and hence the ratio of asset classes should not change as per market conditions. Take the example of Nippon India Multi Asset Fund. It is the only multi asset fund, which invests in fixed proportions across four asset classes. It invests 50 per cent in India equities (growth), 15 per cent in debt (relative stability), 15 per cent in commodities (low correlation with equities) and the remaining 20 per cent in foreign equities (global growth prospects). . This allocation formula of 50:20:15:15 (regardless of market conditions) makes it a true multi asset fund. Almost all other multi asset funds like Kotak, UTI and Tata invest their corpus across three asset classes, equity, debt and commodity and largely do not always follow the allocation formula.