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.
