Mult Asset Allocation Fund: Mirae Asset Mutual Fund has announced the launch of Mirae Asset Multi Asset Allocation Fund NFO. It is an open-ended scheme that invests in equity, debt and money market instruments, gold ETFs, silver ETFs and exchange traded commodity derivatives. What asset classes have in common is that they are highly correlated with each other and their performance depends on factors that may be independent of each other; Therefore a combination of asset classes can help balance volatility.
You can invest till 24th January
This new fund offer will open on 10 January 2024 and close on 24 January 2024. The fund will be managed by Harshad Boravke (equity part) and Amit Modani (debt part). It will be necessary to invest at least Rs 5000 lump sum in Mirae Asset Multi Asset Allocation Fund, while SIP will start from at least Rs 500 monthly. Apart from this, Siddharth Srivastava will manage the overseas investment part and Ritesh Patel will manage commodity investments.
The combination of asset classes has provided a better investment experience over the years and the fund aims to capture the business cycle benefits of different assets over a period of time. In fact, when it comes to different asset classes, the winners keep changing and hence it is difficult to predict which asset class can consistently perform better, the same is the case with multi-assets.
If we look at the annual return tables for equity, gold, debt and multi-asset, the performance of multi-asset has been similar most of the time, especially in the last 3 years.
(Source: AceMF, AMFI, Bloomberg, From 1st Jan 2009 to 29th Dec 2023).
(Note: *Multi Asset: E: 65%, D: 20%, G: 15%), E:Equity: S&P BSE 200 TRI, D:Debt: NIFTY Short Duration Debt Index, G:Gold: Domestic Gold Prices. Returns for more than 1 year are CAGR, less than 1 year are absolute. Past performance may or may not sustain in the future.)
What is asset allocation?
Asset Allocation (Multi Asset Allocation) means diversified portfolio. That means giving some share to different asset classes in the portfolio. For example, the portfolio should have a mix of equity, debt, fixed income, gold or other options. Different asset classes can become market leaders in different cycles. That means their performance may vary from cycle to cycle. In such a situation, if there is ever a decline in debt, equity can balance it. Whereas the decline in equity or debt can be balanced with gold or commodity.
What are asset allocation funds?
Multi asset allocation fund brings diversification in the asset group by investing in different securities. Equity, debt and gold are the most common asset classes where multi allocation funds invest. Fund managers invest dynamically in these asset classes depending on how the economy and markets operate. For example, if the stock market is bullish, the fund manager may increase the portfolio's exposure to equity-related options. Whereas exposure in debt instruments can be reduced. If there is a rise in debt or gold, then exposure to it can increase. Since returns are not based on any one asset class, the portfolio has a better chance of generating risk-adjusted returns.
Manage market volatility better
Commenting on the launch of the new fund offer, Harshad Boravke, Fund Manager, Mirae Asset Investment Managers (India) Pvt Ltd, said the mix of asset classes can protect the portfolio in market fluctuations or act as a hedge, leading to Market volatility can be managed better. Mirae Asset Multi Asset Allocation Fund aims to bring a secure investment experience to investors. Such a product can be a better option for investors who want to invest in different asset classes and bring them under a single scheme.
Better returns in the long run
Swaroop Anand Mohanty, Vice Chairman and CEO, Mirae Asset Investment Managers (India) Pvt Ltd, said the primary concern of investors is to grow their wealth by dealing with volatility. This can be achieved with a combination of different assets. This can relieve the investor from worrying about which asset class will perform well and allow combinations that can work in a more systematic manner. The aim of multi asset is to deal with market volatility. Mirae Asset Multi Asset Allocation Fund NFO will close on January 24, 2024 and will reopen for continuous selling and repurchase from February 1, 2024.