Multi-asset funds are usually meant for those investors who are risk averse. They don’t have much experience in the stock market, but want to earn good stock trading returns on their investments.
These funds invest in stocks, bonds and other fixed income instruments. The percentage of each depends on the fund manager’s market analysis. They can keep the same equity exposure or increase it if they think the market is going up.
This makes multi asset funds less volatile than pure equity funds, as they also invest in fixed income instruments which provide stability to the portfolio. Multi asset funds have lower returns than pure equity funds, but higher than debt funds.
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How is a multi-asset fund different from an equity mutual fund or a debt mutual fund?
A multi-asset fund is a type of mutual fund that invests in a variety of asset classes.
While most funds invest only in stocks (equity funds), or in bonds (debt funds), or in a combination of stocks and bonds (balanced funds), multi-asset funds take this concept to the next level and invest in other asset classes as well.
These asset classes include real estate, gold, commodities, and international stock exchanges.
The allocation between these asset classes depends on the underlying objective of the fund.
For example, if the objective is capital protection, then the fund will have a relatively higher allocation towards debt and gold, while equity exposure will be low.
If the objective is moderate growth with modest volatility, then the allocation will be more towards equity than debt.
Also read – different types of mutual funds
Benefits of Investing in Multi-asset Funds
There are many good and valid reasons to invest in Multi-Asset Funds. These funds can be a boon for investors who have a low-risk appetite or are looking to diversify their portfolio.
Here are some benefits of investing in Multi-Asset Funds
1. Diversification and Lower Risk
One of the most important advantages of multi-asset funds is diversification.
Apart from diversification across sectors, they also offer diversification across asset classes such as equity, debt, real estate, gold etc.
Investing in different asset classes means diversifying your portfolio to spread out your risk. It is advisable not to put all your eggs in one basket.
2. Flexibility of Investments
Multi-asset funds offer greater flexibility as they can invest in any class or combination of asset classes depending on the market conditions and the fund manager’s outlook towards particular assets.
Such flexibility enables them to outperform over longer periods of time when compared to other single asset class investment options such as equity or debt mutual funds.
3. Managing Inflation
If you’re investing for the long term, managing the impact of inflation is critical to ensure that your savings retain their value over time.
By investing in multi-asset funds, you are investing in a basket of assets that have a higher return potential than a single asset class, helping you beat inflation.
Multi-asset funds also offer the flexibility to invest in different asset classes with varying risks and returns.
For example, if an investor has excess exposure to equities through their SIPs, they can invest in a multi-asset fund that has exposure to debt and other asset classes like gold.
This offers them the flexibility to customize their portfolio based on risk appetite and investment goals.
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Top multi-asset funds to invest in 2022
|Mutual Funds||5 Year Returns||3 Year Returns|
|Quant Multi Asset Fund Growth||18.66||29.99%|
|Axis Triple Advantage Fund – Direct Plan – Growth||13.38||17.73%|
|Axis Triple Advantage Fund||11.92||16%|
|HDFC Dynamic PE Ratio Fund of Funds – Direct Plan – Growth||10.81||13.66%|
A multi-asset fund is an all-weather option for an investor, as it invests across various asset classes and sectors, thereby reducing the overall risk of the portfolio. This makes multi-asset funds suitable for investors who have a moderate risk appetite.
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