Multi Asset Funds: All About The Most Popular Multi Asset Funds 2020

What are Multi Asset Funds?

Multi Asset Funds are a category of hybrid funds that invest at least 10% in multiple asset classes. They offer diversity to the portfolio of an individual while keeping in check the risks and returns. A multi asset fund will invest in at least 3 types of fund classes, and will distribute the risk involved by investing in both low risk and high risk asset classes.

Multi Asset Funds portfolios are considered to be better diversified than regular hybrid fund folios. This is because traditional hybrid funds invest in a combination of bonds and equities that have a relatively similar movement in the market thus, a higher correlation. However, adding other asset classes like gold, international equities to the mix will offer better diversification  and reduce the volatility.

In India most Multi Asset Funds invest in 3 asset classes including equity, debt & gold but with changing times, we are seeing that more and more fund houses are expanding their horizons. Just a few days back, the very famous and reliable Motilal Oswal AMC came up with a Multi Asset Fund that offered diversification in 4 asset classes. The classes included gold, debt, equity and international equities. 

Starting from 7th August, Nippon India Mutual Fund house will be offering a Multi Asset Fund NFO that will invest in Equity, Debt and Exchange Traded Commodity Derivatives and Gold ETF. In a simple manner, it will be investing in domestic equities, overseas equities, debt and commodities. Multi Asset Funds have multifold benefits, check out below.

What are the Benefits of investing in a Multi Asset Fund?

There are a number of reasons why investing in Multi Asset Funds is a great choice:

1. Portfolio Diversification

By investing in a Multi Asset Fund you can ensure diversification in the asset allocation in your portfolio. It is no secret that diversification of your portfolio is a healthy investment step. Your money is divided and invested in various asset classes with different risk-return styles. You will be rewarded accordingly.

2. Stable Returns 

Multi Asset Funds are a great option for investors that are not ready to take high risks yet want to earn stable income. You must remember that, with diversification you will be able to achieve stability in your portfolio but you’ll never have multi asset funds as the highest return earning class. 

3. Ready Made Portfolio

Since Multi Asset Funds have a diverse approach by design, these funds have a great return and risk ratio which is beneficial for any beginner investor with less risk tolerance. These funds will offer you a ready made, optimized portfolio almost as if a financial advisor has asked you to invest in these specific assets. By investing in Multi Asset Funds, you can have your cake and eat it too; Invest in all asset classes by investing in just one fund!

4. Automatic Rebalancing

It is an important task to revisit your portfolio and rebalance it time and again to keep up with the market volatility. Since the markets are ever changing, you won’t have the time to rebalance your portfolio often but guess what? With these funds, you don’t need to worry about that. Your fund manager will be making the important asset allocation changes to keep up with the market, and maximise the returns.

Popular Multi Asset Funds in 2020

Here’s a list of 4 most popular Multi Asset Funds from this year:

1. ICICI Prudential Multi Asset Fund

NAV – ₹ 260.8422
Total AUM – ₹ 10484.3 Cr
Expense Ratio – 1.76%

2. UTI Multi Asset Fund

NAV – ₹ 35.7284 
Total AUM – ₹ 637.33 Cr
Expense Ratio – 2.41%

3. HDFC Multi Asset Fund

NAV – ₹ 34.997
Total AUM – ₹ 238.27 Cr
Expense Ratio – 2.47%

4. SBI Multi Asset Allocation Fund

NAV – ₹ 30.2746
Total AUM – ₹ 235.15 Cr
Expense Ratio – 1.83%

Note: Data as on 28th July 2020