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What is the rationale for launching DSP Multi Asset Allocation Fund?
Indian equities are trading at high valuation multiples currently. Data tells us that an investment made in Nifty when it is trading above 22 times trailing price to earnings multiples yields below average returns over the next 3 to 5 years.
Within the global landscape, several markets are trading at attractive valuations versus the US (S&P 500 is trading at 20x trailing earnings, higher than pre-pandemic valuations). Moreover, gold hasn't seen a bull market since its peak in 2011 and multiple factors are aligning for it to perform better in the coming years.
Hence, a well-diversified portfolio of domestic equity, global equities, debt and gold is likely to offer better risk-adjusted returns with lower volatility. The endeavour is to present an investment product which helps investors have a better investment experience and allows them to stay invested through market fluctuations.
MFDs can do asset allocation for their clients through existing set of funds. Why should they look at multi asset allocation funds then?
Asset allocation done outside a mutual fund framework needs asset allocation skills and is prone to tax leakages. Data suggests that a typical multi asset allocation portfolio within a mutual fund could deliver 100 bps higher returns versus a DIY (Do it yourself) portfolio because of tax leakage due to rebalancing.
This category therefore becomes an important one for investors to invest for the long term.
Every fund has a certain role in investors' life. For instance: Flexi cap fund is good for long term goals like retirement or liquid funds can be used to create emergency corpus. In your view, where do multi asset funds fit into client's portfolio?
Multi asset funds provide investors the choice of investing at any point in time without worrying about asset class valuations or market conditions. An investor doing an SIP in a multi asset fund enjoys time, asset class and market cap diversification within equity allocation.
This helps in reducing portfolio volatility and makes multi asset funds ideal for long term wealth creation and preservation. These funds fulfil multi generation wealth transfer goals with the benefit of wealth creation.
Currently, there is ambiguity on the taxation of multi asset funds where the equity holding is between 35% and 65%. Talking about DSP Multi Asset Allocation Fund, what is the percentage allocation to equity and how will it be taxed?
DSP Multi Asset Allocation Fund will have a minimum of 35% allocation to Indian equities at all times and will be taxed at 20% with indexation benefits.
How should MFDs make multi asset allocation fund simple for their clients? (How should they sell it effectively?)
A fund which will reduce the possibility of wrong investment decisions of selling when markets fluctuate. An effective investment solution for strengthening portfolios by true diversification across time, assets and cycles.
Why should distributors talk about DSP Multi Asset Allocation Fund with their clients? And what makes it different from other multi asset funds?
DSP Multi Asset Allocation Fund is a true-to-label fund. It invests across different asset classes with the ability to raise weights when opportunities arise in various asset classes. It is one of its kind with ample exposure to gold and lower fluctuations versus other assets.
Who should invest in multi asset funds and what is the ideal time frame to hold this fund?
This fund is ideal for all investors. However, they should look to invest with a minimum time frame of 3 to 5 years, although the ideal time period to invest is truly long term.
