Multiple asset funds is the new flavour among AMCs
The mutual fund industry has seen a host of multi asset fund launches in the recent past. These funds invest in gold, equity and debt to provide investors growth with stability.
Cafemutual spoke to leading financial advisors to find out their take on such funds. Some feel that multi-asset fund are a good choice as they provide exposure to three asset classes while others believe that constructing a portfolio should be best left to a financial advisor and not to a fund.
Vinod Jain of Jain Investment Planner says that he scrutinizes the fund’s performance closely before recommending such funds to his clients "Multi-asset funds make sense only if the underlying assets beat their respective benchmarks. We recommend such funds only after an in-depth study of the fund’s performance," said Vinod.
These funds have a cap on each category of asset (equity, debt and gold). Fund managers can navigate and re-balance the portfolio depending on the market conditions.
Industry experts say that multi-asset funds are usually targeted at passive investors. Hemant Rustagi of Wise Invest Advisors says “Multi-asset funds are suited for those investors who cannot decide about asset allocation themselves. Such funds help them to take exposure easily in three asset classes. It also takes care of the tax factor. But we do not recommend such funds because we ourselves specialize in asset allocation."
Some are of the view that AMCs have been aggressively pushing such funds by
offering commissions higher than those offered in plain vanilla equity funds. “Such
funds provide three different asset classes in one plate which is good for
retail investors. But most of the investment that have flown into such funds is
because of the high upfront commissions offered by AMCs," says Dhruva Raj
Chatterji, Senior Research Analyst, Morningstar India.
