Why Multi-Asset Fund Should Be a part Of a Portfolio By Amitabh Verma, Director & Co Founder, Fission Wealth Private Limited

Investment is a necessity and not a luxury. Given the persistent high inflation and improving lifestyles giving rise to various financial goals, there is no option but to invest for accomplishment of future goals with inflation-beating returns. Investments through mutual funds have fast emerged as one of the most prudent ways to successfully create goal-oriented wealth with ease.

Having said that, one needs to have a happy experience too during the investment process. Several strategies like risk-mitigation with asset allocation coupled with diversification work quite well for a fulfilling investment experience. It is needless to say that these strategies are basics of investments which, if one adheres to, can result in successful, stress-free and comfortable life-long experience when it comes to wealth creation.

It is here that the category of Multi-Asset Fund establishes its relevance. They are like evergreen mutual funds which are efficient irrespective of the market cycles across the asset classes. Not only are they capable of generating optimum returns, they are also equipped to navigate through the risk factors which keep popping up during the investment phase.

What is a Multi Asset Fund?

As the name suggests, this a category of hybrid mutual fund scheme whose mandate is to invest in three or more asset classes with a minimum exposure of 10% to each. Such a fund typically invests into equity, debt and gold. Some funds may also invest into assets classes like REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts). Since each of asset classes are unique and distinct with different valuation dynamics, market cycles along with various risk to reward ratios, a multi-asset fund endeavours to capture the essence of all asset classes within a single fund.

What makes the scheme an evergreen wealth creation vehicle over the long-term is its ability to change its exposure to various asset classes basis the changing market and macro outlook. Also, one need not fear about asset concentration risks given that the portfolio is adequately diversified across asset classes at all times. Historical data shows that investors who followed asset-diversification have emerged wealthier despite several market upheavals.

A One-Stop Solution

A Multi-Asset mutual fund is a one-stop solution for your investment needs. By investing in this fund, an investor automatically gets exposure to multiple asset classes. Also, the quantum of exposure to each of the asset classes is tweaked or maintained by the fund manager, thereby ensuring that the exposure is optimal in nature. As a result, an investor need not worry about ensuring optimal diversification, rebalancing etc., thus saving investors' time and energy.

At a time when inflation is persistently high, equity market valuations are high and the best of interest rates seem to be behind us, if you are an investor who is worried about where to incrementally invest, then one of the options for you is the multi-asset fund. This is the reason multi-asset as a category has been gaining traction over the past year.

Why Multi Asset Fund

1) Diversification at its Best: Multi Asset Fund ensures your investment amount is spread across various asset classes. A diversified portfolio augurs well to overcome the high-risk factor associated with an asset class like equity, while you get better returns than what traditional avenues offer.

2) Flexibility : Since Multi Asset Fund involve allocation across all major asset categories, your investment is free from rigidity. This approach tends to deliver optimal returns over the long term, as the risk element is diversified across multiple asset classes.

3) Professional Management : Given that the fund is actively managed investors need not worry about decision on the allocation of various asset classes, rebalancing etc. The experienced fund managers, as per the market situations, will do the needful on your behalf. Such active management allows investors to benefit from market fluctuations with optimum returns.

To conclude, risk-adjusted wealth creation over long-term is the core mandate of a Multi-Asset category offering. If you are an investor looking for lump sum investment in the current market environment, then a multi-asset offering can be a good starting point. Given the nature of the fund, investors can consider this offering as a part of one’s core portfolio and SIP into it.