Who Should Invest In Multi-asset Allocation Funds?

By Author: Anand Srinivasan
Total Articles: 9
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When planning to invest, you need to have a goal. You should then determine a deadline to stay on track. Lastly, figure out the best strategy to achieve your aim within the deadline. You need a flexible approach to invest and diversify your portfolio to ensure a desired financial outcome. This is when Multi-Asset Allocation Funds help.

However, learn about the fund’s various features and benefits before investing. You should also determine if they are a suitable investment for you. Nonetheless, if you are unsure, this guide provides a better understanding of these funds and their suitability.

About Multi-Asset Allocation Funds

When you opt for a New Fund Offer or NFO like Multi-Asset Allocation Funds by a reputed AMC, you can invest in them. These funds are open-ended schemes and a type of Hybrid Funds. According to SEBI guidelines, the Multi-Asset Allocation Funds should invest in a minimum of three asset classes with at least 10% allocation in each class.

Hence, when you ...
... invest in such a fund, you can enjoy the benefit of a diversified portfolio. It may include assets such as international stocks, domestic Equities, domestic Equity, Exchange-Traded Commodity Derivatives, Gold Exchange-Traded Derivatives, etc.

Advantages

Multi-Asset Allocation Funds offer a host of benefits:

• When investing in these funds, for example, the DSP Multi Asset Allocation Fund, you can make a Lumpsum Investment. Conversely, you can start with a small amount and invest at fixed intervals using a Systematic Investment Fund.

• These funds diversify your investment into various asset classes. These include Equity, Debt, and other assets like Real Estate Investment Trusts and Gold or Silver Exchange-Traded Funds.

• They come with the advantage of automatic portfolio rebalancing. Rebalancing the portfolio and reallocating the assets lets you tide through the ups and downs of the market.

• Expert fund managers generally handle these funds. They do all the research. They also allocate the funds strategically, depending on their observations.

Who should invest?

You can invest in the best Multi-Asset Allocation Fund in the following situations:

• If you are investing for the first time


• You are unsure which fund to invest in and seeking a one-stop fund


• If you are seeking exposure to various asset classes simultaneously


• If you want long-term returns like Equity Investments but want lower drawdowns

Multi-Asset Allocation Funds are suitable for investors who want steady returns but have a low-risk appetite. Such a fund evens out the risk associated with investing in only one asset class. It also ensures steady income when some assets might be underperforming.

Conclusion

Multi-Asset Allocation Funds invest in various asset classes and offer multiple benefits. They are also considered to be flexible. However, ensure they suit your investment goals and risk appetite.