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Many AMCs are
planning to launch funds which invest in a combination of two or three asset
classes like debt, equity and gold ETFs, to tide over the uncertain market.
Uncertain
market conditions and spectacular performance of gold has made fund houses
launch multiple asset allocation funds which invest in a mixture of debt,
equity, gold and money markets.
Recently,
Morgan Stanley launched its open ended debt scheme called Morgan Stanley
Multi Asset Fund which invests in debt, equity and gold. “There is an appetite
for funds with reasonable returns with controlled level of risk. Given the
recent volatility in markets, investors are focusing more on the role of asset
allocation in their investment decisions, and funds which provide an automatic
asset allocation solution are gaining favour,” says Anthony Heredia, Managing
Director, Morgan Stanley Mutual Fund.
BNP Paribas Mutual Fund has launched BNP Paribas
Income & Gold Fund which invests in debt, money market securities, and gold
ETFs.
A
couple of fund houses have filed offer documents with SEBI to launch funds
which will invest in a combination of debt and equity.
On
Tuesday, DSP BlackRock Mutual Fund filed an offer document with SEBI to seek
approval for its open-ended fund-of-funds
called DSPBR Dynamic Asset Allocation Fund. This fund will invest in DSP BlackRock Equity Fund and
DSP BlackRock Strategic Bond Fund.
On
27th March, Taurus Mutual Fund filed an offer document with SEBI for
its Taurus Twin Advantage Fund. This fund will invest in debt, money markets
and gold ETFs.
In
February, IDFC Mutual Fund filed for its IDFC Balanced Fund. This fund will
invest a minimum of 40% in equity and a maximum of 60% in debt. In the same
month, SBI AMC filed for its SBI Edge Fund—a hybrid fund which will invest in a
mixture of equity, debt and gold ETFs.
Similarly
in January 2012, L&T Mutual Fund had filed for its L&T Prudence Fund
which will invest a minimum of 60% in large cap stocks and a up to 40% in debt
and money markets.
Asset
allocation funds posted an average of 7% returns over a one-year period while most
equity diversified funds have yielded a negative 9% return over the same
period.
However,
experts caution that gold may not continue to shine in the future. “Going ahead,
there is uncertainty whether gold will continue to perform. These (asset
allocation) funds have delivered good returns because of the gold component compared
to MIPs which have exposure to only debt and equity. But gold has become volatile now and the
downside risk has increased. Investors who wish to take limited exposure to
gold can invest in asset allocation funds,” says Dhruva Raj Chatterji, Senior
Research Analyst, Morningstar India.
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