Diversification is a key facet of a robust investment portfolio. Investors can diversify by investing in multiple securities within the same asset class – such as debt or equity. However, even broader diversification can be achieved by spreading investments across multiple asset classes.
A multi asset allocation fund offers this to investors. The fund is designed to provide exposure to at least three asset classes, such as equity, debt, and commodities.
Diversification can add resilience to an investment because the performance of the portfolio does not depend just one or a few securities. Moreover, different asset classes typically respond differently to market conditions. This helps multi asset allocation funds optimise growth potential while mitigating risk in various economic scenarios.
Such funds are dynamically managed, which means that fund managers can flexibly alter the allocation ratio based on market trends. For instance, when equity markets are down, allocation to debt and gold can be increased to lend relative stability and prevent significant losses.
This article tells you how multi asset allocation funds could suit different kinds of investors.
Investors seeking a balance between growth and stability
Multi asset allocation funds provide a diversified portfolio that includes equities for growth potential debt for relative stability. This blend can create optimised risk-adjusted returns in long term. For example, middle-aged professionals who aim to grow their wealth steadily over time while safeguarding against significant losses may find these funds suitable.
Investors with a high risk-appetite:
Aggressive investors who usually lean towards pure equity funds may benefit from the diversification of multi asset allocation funds. The equity portion lends growth potential while the inclusion of debt and gold can add a cushion during market downturns. A multi asset allocation fund can therefore be a way to add a degree of stability to an aggressive portfolio.
Investors seeking inflation-beating returns
Low-risk investments typically prioritize potential capital preservation over high returns. However, over the long term, inflation can erode the effective value of your returns. Equity investments, though risky, offer growth potential in the long term. Moreover, markets tend to be volatile in the short term but can stabilise over longer horizons.
Investors who are open to taking some risk can therefore consider multi asset allocation funds for their longer-term investments. The exposure to relatively lower-risk assets like debt and gold can offer a cushion against market volatility, while the equity component can lend return potential.
First-time investors:
For those new to the world of investing, multi asset allocation funds offer a simple and effective way to gain exposure to different asset classes without needing to manage multiple investments. This can simplify the investment process.
Bajaj Finserv Multi Asset Allocation Fund
Investors looking to balance growth potential with stability can consider Bajaj Finserv Multi Asset Allocation Fund, which is equipped with growth and dividend boosters to optimise return potential.
The fund uses a dividend-yield investing strategy. The portfolio will focus on companies that have a high dividend yield, which, when reinvested, can enhance opportunities for the compounding effect on the potential returns. The fund will also allocate a portion of its portfolio to debt securities and commodities, including gold and silver. Additionally, it may invest in real estate investment trust (REITs) and infrastructure investment trusts (InVITs).
The New Fund Offer period began on May 13th, 2024 and is on till May 27th, 2024. Investors can buy units at a face value of Rs 10 during this period. When the fund re-opens for subscription, investors can buy units at the Net Asset Value at the time of redemption.
Minimum investment amount for lumpsum and SIP is Rs 500 respectively. Investors can purchase units through their distributors, various digital channels, or directly through Bajaj Finserv Asset Management Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
