AUM data as of December 31, 2022
(Source: ACE MF) <\/p>\n\n\n\n

Why should Multi Asset Allocation Funds should form a part of your portfolio?<\/strong><\/p>\n\n\n\n

Different asset classes react differently to the varying macro-economic situation, sometimes equities outperform and other times, it could be debt or gold. So, when you invest across multiple asset classes, the impact of any sharp negative movement in one asset class will be mitigated by the likely rise in other asset classes. It is noteworthy that all asset classes do not always move in the same direction at the same time.<\/p>\n\n\n\n

The low correlation among assets enables Multi Asset Allocation Funds to protect the downside risk during uncertain economic conditions and volatile markets, and generate better risk-adjusted returns.<\/p>\n\n\n\n

Therefore, by diversifying across multiple asset classes, your portfolio will be able to preserve the value of your capital across market phases more effectively as well as earn decent returns compared to when you invest in just one asset class.<\/p>\n\n\n\n

Diversification across asset classes can result in optimal risk-adjusted returns<\/em><\/strong><\/p>\n\n\n\n

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Data as of December 31, 2022
(Source: ACE MF, MCX, PersonalFN Research)\u00a0<\/p>\n\n\n\n

What are the advantages of investing in Multi Asset Allocation Funds?<\/strong><\/p>\n\n\n\n

1. Facilitates diversification across asset classes, which reduces risk and optimise gains<\/p>\n\n\n\n

2. Enables timely portfolio rebalancing, based on the performance and the outlook of each underlying assets by a professional fund manager<\/p>\n\n\n\n

3. Provides relief from timing and monitoring asset markets<\/p>\n\n\n\n

4. Benefit from the strong research capabilities of a fund management team<\/p>\n\n\n\n

5. The cost of investing is reduced<\/p>\n\n\n\n

6. Makes portfolio tracking easy<\/p>\n\n\n\n

Moreover, asset allocation is not static; it is dynamic. Meaning the asset allocation is reviewed regularly, and necessary portfolio changes are done based on the analysis of the influencing factors by the fund manager.<\/p>\n\n\n\n

Average Asset Allocation of Multi Asset Funds<\/em><\/strong><\/p>\n\n\n\n

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Data as of December 31, 2022
(Source: ACE MF, PersonalFN Research)\u00a0<\/p>\n\n\n\n

The fund managers of Multi Asset Fund have much leeway in building a suitable portfolio based on the market conditions. The equity portion can be invested across market caps and sectors, while the debt portion can be invested across duration and credit profiles. In terms of gold, the investments are usually in Gold ETFs and Gold Exchange Traded Commodity Derivatives (ETCD). The balance can be allocated in cash and cash equivalents. Some Multi Asset Allocation Funds also hold exposure to Derivatives, REITs & InvITs, Silver, and Overseas equities.<\/p>\n\n\n\n

Who should invest in Multi Asset Allocation Funds?<\/strong><\/p>\n\n\n\n

Multi Asset Allocation Funds are suitable for investors seeking long-term capital appreciation, have a moderately high-risk appetite, and have an investment time horizon of 3 to 5 years. With a Multi-Asset Fund, you as an investor will be able to balance the risk better with a sensible investment strategy in place. Ensure that you choose a suitable Multi Asset Allocation Fund that aligns with your personal asset allocation plan.<\/p>\n\n\n\n