Multi-Asset Funds For Meeting Long-term Needs Amidst Market Volatility, Suggest Experts

As the financial year approaches its end with the arrival of the New Year, several new fund offers, including the Sundaram Multi-Asset Allocation Fund, are being introduced. This provides an opportunity to discuss the nature of multi-asset allocation funds.

Generally, these funds are less volatile than others, investing in various asset classes like equity, debt, gold, and real estate, diversifying the risk and making them a reliable investment option. The mandatory allocation of at least 10 per cent to each asset class ensures this diversification.

Multi-asset funds offer a great benefit by providing investors with allocation without the need to purchase individual assets. Investing in a single fund allows exposure to a variety of asset classes, fulfilling investment requirements.

Since rebalancing is carried out within the fund, investors are relieved of the burden of buying, selling, and paying taxes on gains from isolated assets. Dwaipayan Bose, co-founder of Advisorkhoj, emphasises that diversification across asset classes is essential for most investors who dislike market volatility and prefer a smooth investment experience.

He suggests three factors to consider when evaluating a multi-asset fund. Firstly, it is crucial to ensure that the fund's asset allocation mix remains true to its label and provides the best returns from each asset class. For instance, the Nippon India Multi Asset Fund maintains an unchanging asset allocation mix of 50:20:15:15 across domestic equity, overseas equity, commodities, and debt, ensuring consistency in returns.

Secondly, it is advisable to choose a fund that has exposure to international equity. The Nippon Multi Asset Fund, for example, invests across four asset classes, allocating 20 per cent of the corpus to international equity. Other multi-asset funds such as Sundaram, Invesco, and Axis also invest in global markets.

Investing in a multi-asset fund has several benefits, including indexation, which helps investors get more from the fund. 

The value of the investment is calculated keeping factors like inflation in mind, resulting in more gains. Multi-asset funds have provided good returns in the last year, with Nippon India Multi Asset Fund leading with a 15.72 per cent return, followed by Motilal Oswal with 13.85 per cent and HDFC Multi Asset Fund with 13.74 per cent. 

Tata Multi Asset Fund clocked in a return of 12.71 per cent.