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Till Date CAGR
|Quant Multi Asset Fund (G)|
|ICICI Prudential Multi Asset Fund (G)|
|HDFC Multi Asset fund (G)|
|Axis Multi Asset Allocation Fund (G)|
|UTI Multi Asset Fund (G)|
|SBI Multi Asset Allocation Fund (G)|
|Motilal Oswal Asset Allocation Passive Fund of Fund Aggressive (G)|
|HDFC Asset Allocator Fund of Funds (G)|
|ICICI Prudential Passive Multi Asset Fund of Funds (G)|
|Baroda BNP Paribas Multi Asset Fund (G)|
|HSBC Managed Solutions India Moderate fund (G)|
|Aditya Birla Sun Life Asset Allocator FoF Scheme (G)|
|Motilal Oswal Multi Asset Fund (G)|
|Nippon India Asset Allocator FoF fund (G)|
|Quantum Multi Asset Fund of Funds (G)|
|Tata Multi Asset Opportunities Fund (G)|
|Motilal Oswal Asset Allocation Passive Fund of Fund Conservative (G)|
|Aditya Birla Sun Life Multi Asset Allocation Fund (G)|
|Kotak Multi Asset Allocator Fund of Fund Dynamic (G)|
|Franklin India Multi Asset Solution Fund of Funds Plan (G)|
Multi Asset Allocation funds, as the name suggests, are a type of mutual fund that invest across different asset classes by investing in different securities. The most common asset groups that these funds invest in are equity, debt, and gold. Therefore, this fund intends to create a portfolio that comprises more than one asset class. One can invest in multi asset allocation funds through the SIP route and lump sum route.
As per SEBI Regulations, a multi asset allocation fund should invest at least 10% of its portfolio in three or more asset classes. Hence, this fund gives investors the benefit of exposure to a diversified portfolio. Furthermore, SEBI does not impose any restrictions as long as the 10% rule in three asset classes is followed. Thus, a fund manager can also choose to invest in a small cap, large cap or mid cap equities based on the fund’s objective.
The fund manager of the fund house plays an important role in these types of funds. They will allocate funds in these asset classes based on how the economy and markets are performing. For instance, if the stock market is going up, the fund manager will increase the exposure towards equity while reducing the exposure towards debt instruments. On the other hand, if the fund manager is negative about the economy, then he/she might increase the exposure towards related gold instruments and reduce allocation towards equity or debt instruments.
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|Fund Name||Returns Since Inception||Expense Ratio|
|ICICI Prudential Multi Asset Fund||21.2%||1.80%|
|Tata Multi Asset Opportunities Fund||22.1%||2.17%|
|Nippon India Multi Asset Fund||14.5%||1.77%|
|HDFC Multi Asset fund||9.7%||2.12%|
|Quant Multi Asset Fund||10.5%||2.31%|
The following are the advantages of investing in multi asset allocation funds.
Even though diversification is one of the major advantages of a multi asset allocation fund, there is a risk involved in each type of asset class that the fund invests in. For instance, market risk is involved in equity funds. There is interest rate risk in debt funds which can affect the returns of the fund. The prices of gold also fluctuate. Also, if the fund has invested in real estate, then there is liquidity risk.
Therefore, the fund manager must consider all the factors while selecting a fund. Also, if the fund manager lacks the required expertise, then selection on funds might go wrong. This might, in turn, affect the performance of the fund. Furthermore, if the investor has an investment horizon for the long term, the overall risk on the portfolio reduces to a great extent.
Long multi asset allocation funds invest in securities across different asset classes. Therefore, one should have a long investment horizon, i.e. above three years, while investing in these funds. This fund is suitable for investors who are not willing to take a higher level of risk. Also, this is for investors who are looking for stable and consistent returns from their investments.
Investing in multi asset allocation funds provides a diversified fund portfolio to the investor. Hence, portfolio diversification mitigates the risks associated to a great extent and provides steady returns. Moreover, it helps to even out the risk of investing in just one type of asset class. Also, there is a steady flow of income for the investors even when some asset classes are underperforming more than usual. Additionally, the equity exposure in this scheme offers capital gains in the long run. Overall, the investor must check the portfolio of multi asset allocation funds before they invest in them.
|Funds||Short Term Capital Gains (STCG)||Long Term Capital Gains (LTCG)|
|Equity oriented fund||Holding Period: less than 12 months|
Tax: at flat 15% in the investor’s hands irrespective of the income tax slab rate.
|Holding period: 12 months or more|
Tax: Capital gains up to Rs. 1 lakh is exempted per PAN card. Anything above Rs. 1lakh is taxable at 10%
|Debt oriented Fund*||Holding Period: less than 36 months|
Tax: the capital gains are added to the overall income and taxed as per the individual income tax slab rate.
|Holding Period: 36 months or more|
Tax: Capital gains are flat 20% after indexation.
*Note: As per the Finance Bill 2023, from April 1st 2023, capital gains from debt mutual funds will be taxed as per the investor’s IT slab rate. Debt funds will no longer have the LTCG benefit.
Additionally, from FY 2020-2021, the dividends are taxable in the hands of the investors as per their income tax slab rate. Additionally, dividends above INR 5,000 are subject to a TDS of 10%. Moreover, equity funds are subject to securities transaction tax (SST) of 0.001% if investors sell the units.
Multi asset allocation funds can be a good addition to the investor’s portfolio if the scheme is selected carefully. However, this cannot be the only alternative to diversify a portfolio. One should invest in different asset classes to build a well-designed portfolio that aligns with the financial goals and investors risk profile. Overall multi asset funds can help investors during dynamic market movements and their effect on different asset classes.