Multi asset allocation funds - Savour an investment platter

Who doesn’t relish a vast ‘Indian thali’ offering a blend of diverse delicacies ranging from savoury items to desserts? The variety not only presents different flavours to our taste buds but also provides a host of necessary nutrients. Just like we desire variety in our food, diversification of assets in our portfolio is one of the critical investment strategies which can help achieve our objectives.

Given the uncertain nature of the economy and markets, putting all your money in one type of asset class may present a high risk. Different asset classes offer different potential advantages and levels of risk depending on the economic cycle. While equity as an asset class may offer growth during bull markets, debt can be a more attractive option during interest rate hikes, while commodities like gold and silver can serve as a hedge against inflation.  

However, diversification of investments can be a confusing and laborious task for many investors who may not have the essential knowledge to understand the market trajectory.

Multi-asset allocation scheme is a type of hybrid scheme offered by mutual funds, which carries the advantage of offering investors a variety of asset classes in a single fund.

 

Here are a few key factors to consider with respect to multi-asset allocation funds:

1. Diversified asset allocation: This is probably one of the most significant features of multi-asset allocation funds. Spreading your money across different types of permissible asset classes like equities, debt, commodities ETF, etc. can work as an effective balancing mechanism because if one of the asset classes may not be doing well during a particular market phase, the other asset classes in the portfolio may compensate and cushion the impact. This can help investors reduce potential risks and help them achieve their investment targets.
2. Professional management: Multi Asset Allocation Funds are actively managed by fund managers who have experience investing during various economic phases with various asset classes. This can make the investment journey stress-free for the investors as they do not have to monitor and take decisions as per the market fluctuations. Fund managers will aim to take the best possible decisions to help investors of the fund achieve the investment objective with minimum risks while considering factors like what the economic outlook is and how well different asset classes are performing, amongst others.
3. Rebalancing of portfolio: The fund managers can rebalance the portfolio periodically and as and when required depending on the market environments. They may allocate more investment to one asset class compared with others, while they may cut down the allocation to this one asset class if the market conditions do not seem suitable for it and decide accordingly, within the permissible investment limits. 
4. Flexibility:  Since multi-asset allocation funds are open-ended schemes, investors have the option to increase their investment in the fund or redeem it as per their convenience and requirement. 

 

Investors should know that there is no guarantee of returns, and one must consult their financial advisors to decide if the fund is suitable for them basis their investment objective and risk appetite. 

 

Disclaimer:

The document is not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.  The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

The document includes statements/opinions which contain words or phrases such as "will", "believe", "expect" and similar expressions or variations of such   expressions, that are forward looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risk or  uncertainties associated with the statements mentioned with respect to but not limited to exposure to market risks, ,  general economic and political conditions in India and other countries globally, which may have an impact on services and/or investments, the monetary and  interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. As per clause 2.6 on Categories of Schemes, Scheme Characteristics and Type of Scheme (Uniform Description of Schemes) of SEBI master circular No.SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74 dated May 19, 2023, Multi Asset Allocation Scheme is a type of Hybrid Schemes category. Kotak Mutual Fund/ Kotak Mahindra Asset Management Company Limited is not forecasting or promising or guaranteeing any returns/future performance. Investors may consult their financial advisor and/or tax advisor before making any investment decision.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.