Determining the right mix of equity, debt, or other asset categories in a portfolio can be challenging. A multi asset allocation fund, however, offers a way to achieve exposure to several asset classes through a single investment.
This is a hybrid mutual fund that invests in at least three asset classes – such as stocks, bonds and commodities. Moreover, it is a dynamically managed fund, which means the asset allocation can vary based on market trends. This flexibility can give the fund the scope to leverage different market conditions and mitigate downside risk.
Here are some ways in which a multi asset allocation fund could potentially enhance your portfolio.
1) Diversification
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Diversification is a cornerstone of smart investing. It means spreading your investments across different assets to reduce risk. A multi asset allocation fund can be a good way to achieve diversification because it includes a mix of asset types. This helps ensure that your portfolio is not overly dependent on a single asset class.
For example, if the stock market declines, the bonds and other assets in the fund can potentially help offset the losses. This balance can provide a relatively stable investment experience as compared to put all your money into one asset category.
2) Growth potential
The equity component of multi asset allocation funds gives it long-term growth potential. Moreover, fund managers can dynamically manage these funds to take advantage of market opportunities. This allows fund managers to tap into investment opportunities in debt, commodities, and other asset classes too.
3) Cushion against volatility
The debt segment of multi asset allocation funds can provide a cushion against volatility. Other asset classes such as commodities, real estate investment trust (REITs) and infrastructure investment trusts (InVITs), can also act as a hedge against the volatility of equities.
Fund managers can flexibility adjust portfolios to increase the exposure to relatively stable asset classes when market conditions are turbulent.
4) Income generation
Multi asset allocation funds can also be suitable for income generation. Many of these funds include assets that can produce income. These assets include stocks, bonds, and (REITs). This can be beneficial for retirees or those seeking a steady cash flow from their investments.
5) Flexibility:
These funds can adapt to changing market conditions by shifting their asset allocation. This can help such funds potentially achieve an optimised risk-return balance. Investors can benefit from this flexibility without needing to independently manage the complexities of asset allocation.
Bajaj Finserv Multi Asset Allocation Fund
Investors seeking a diversified investment avenue can consider the Bajaj Finserv Multi Asset Allocation Fund, which was launched on May 13th, 2024. The New Fund Offer period is on till May 27th, 2024.
The fund has a dividend-yield investing strategy for its equity portion to optimise return potential in long term. The fund will also allocate a portion of its portfolio to debt securities and commodities, including gold and silver. Additionally, it may invest in real estate investment trust (REITs) and infrastructure investment trusts (InVITs).
Investors can buy units at a face value of Rs 10 during the NFO period. When the fund re-opens for subscription, investors can buy units at the Net Asset Value at the time of purchase.
Minimum investment amount for lumpsum and SIP is Rs 500 respectively. Investors can purchase units through their distributors, various digital channels, or directly through Bajaj Finserv Asset Management Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
