No single asset remains as a top performer over long periods of time. Instead, the year’s top performing asset class continues to change with sometimes equities, sometimes gold, debt, commodities, real estate and even bitcoin going through purple patches. In this video, we shall explore a category of funds called the “multiasset” or asset allocation funds.

Chapters:
00:00 Introduction
00:56 What are MultiAsset Funds?
02:47 All Weather? Let’s Put It to the Test
05:51 Multi Asset Funds in India
09:28 Should You Invest in a MultiAsset Fund

WHAT ARE MULTIASSET FUNDS?

A multiasset strategy combines different types of asset classes to create a broadly diversified portfolio. These include stocks, bonds, commodities, gold and more recently, fund houses have started to add international equities and real estate to their portfolio mix.

The rationale behind using different asset classes rides on the fact that each asset behaves differently during various economic phases.

Multiasset funds are often marketed as an allweather portfolio, which is another way of saying that these funds can deliver balanced returns at low risk in all market conditions

ALLWEATHER? LET’S PUT IT TO THE TEST

We did a study and examined how 4 different asset classes would have performed on an individual and combination basis. We did this by the last 15 years of data for four different asset types the Nifty 50, the Nasdaq 100, the Nifty 10Y GSecs and the domestic price of gold. And focused on two important metrics a) the risk or the volatility metric and b) the returns metric

Volatility Our data shows that our reconstructed multiasset portfolio does offer a much lower volatility as compared to three of the four assets in insolation.

Performance – Our data shows that our equal weight multi asset portfolio has done better than bonds and the Nifty 50 in all times frames, and has often trumped Gold over many years

MULTIASSET FUNDS IN INDIA

The multi asset category in India has about 20 odd schemes most of which are available for purchase on the ETMONEY app. The data shows that the average multiasset fund does an excellent job of giving consistent and stable returns

However, individual schemes within the category have different strategies and asset class compositions. As an investor, this understanding is important as every multiasset fund has a different risk levels and has different investment objective for their fund

SHOULD YOU INVEST IN A MULTIASSET FUND?

Multiasset funds are designed to make life easy for an investor and market themselves as a one stop 'mini portfolio' so that the everyday investor does not need to pick multiple funds in different asset classes and can instead, simply pick one multiasset fund

But these funds do have some drawbacks such as: a) your returns expectation cannot be too high and b) possibility of misalignment with your desired asset allocation

In our opinion, using a multiasset fund can be explored if you are very new to investing and have not built your acumen of diversifying with different assets. And as you start understanding how to invest and how different assets operate, you might want to invest in a portfolio of funds and do your own asset allocation and rebalancing. This way you will have more flexibility, more control and you are more likely to balance your risk levels and investment objectives

#ETMONEY #MultiAssetFunds #AssetAllocationFund

To invest in Direct Plans of top Mutual Funds for free, download the ETMONEY app: https://etmoney.onelink.me/unJQ/5ca1ae3b

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