Do you know the ins and outs of multi-asset funds? Is now the best time to diversify your portfolio with funds, or should you wait further? In this article, you will find answers to all your doubts related to multi-asset allocation funds.
Multi-asset funds are the most sought-after investment option during market declines as they combine debt, equity, and gold in a single investment. A study by Ventura Securities showed that 25 asset funds have outperformed the majority of general equity schemes in one, three, and five-year spans.
These fund types are gaining momentum because of their diversification, tax benefits, and risk-adjusted return benefits. To your knowledge, these funds also invest in silver, REITS (Real Estate Investment Trusts), or overseas equities other than just debt, equities, and gold.
Additionally, fund managers use strategic algorithms to make sure of proper asset allocation. This led asset funds to generate competitive returns that several single-asset equity funds lack. All these benefits make multi-asset funds an attractive option for investors searching for a balanced risk-reward profile.
What are the benefits of multi-asset funds investment strategies?
Ever wondered how to make your investments work smarter, not harder? Let me break it down for you. Multi-asset investment strategies are like having a safety net and a growth engine in one. Here’s why they’re awesome.
1. Diversification: Spread the Risk, Boost the Reward
The most crucial benefit facilitated by multi-asset funds is diversification. Here you do not just rely on a single security to perform. If there is some problem with stocks (which used to happen during market declines), bonds might hold steady or even rise.This balance helps in lowering the overall risks while smoothing out returns over time. Think of it as having a backup plan for your money. It’s not just safer; it’s smarter.
2. Automatic Rebalancing: Stay on Track Without the Effort
Markets are unpredictable and your portfolio might get hit if the recession continues for a longer duration. There comes the multi-asset strategy which often includes automatic rebalancing. Incorporating this fund category in your portfolio helps in adjusting your investments periodically and maintaining the right mix. It’s like having a GPS for your money—keeping you on the right path without you lifting a finger.
3. Beginner-Friendly: A Ready-Made Portfolio
Building a good portfolio from scratch is not a walk in the park, it demands time and financial knowledge. Multi-asset strategy saves you on that by providing a professionally designed mix of investments in one package. It is similar to ordering a meal combo instead of picking every ingredient yourself. Overall, multi-asset funds are a perfect choice for beginners as it provide a balanced, diversified portfolio without the hassle.
4. Steady Returns Through Market Cycles
Different assets perform well at different times like stocks rally in a booming economy while bonds outshine others during downturns. Multi-asset strategies work best in capturing these opportunities across different market cycles. This ensures that your portfolio remains balanced even during extreme highs and lows.
Overall, all these benefits of multiple asset classes makes sure that you enjoy more consistent and steady portfolio growth in the long run. Basically, they’re versatile, low-maintenance, and designed to help you weather any storm while growing your wealth. Makes sense, doesn’t it?
Who should invest in multi-asset allocation funds?
If you’re still uncertain whether asset funds are right for you or not. Here is the hint, if you’re cautious investors who want steady returns, with no sleepless nights, look no further. Multi-asset funds are what you need.
These funds are furthermore perfect for hands-off beginner investors. If you are saving towards a retirement plan, these funds will always keep you on track regardless of how volatile the market is. That is the beauty of having a financial safety net – minimal worry and constant protection. Ready to give them a shot?
How multi-asset funds are being taxed?
Multi-asset funds come with tax perks. If the fund invests at least 65% in equities, it’s taxed like an equity fund—20% with indexation after one year. For non-equity-heavy funds, long-term gains (over 3 years) are taxed at 20% with indexation, while short-term gains fall under your income tax slab.
Fund-of-funds (FoFs) are taxed differently. Until April 2025, gains are taxed as per your slab rate. Post that, holding FoFs for over 2 years will align their taxation with regular asset funds. Therefore, you need to plan wisely!
Performance of multi-asset allocation funds
Multi-asset funds have shown impressive results, often competing with pure equity schemes. For instance, Quant Multi Asset Fund outperformed 79% of equity funds over three years and 86% over five years, despite holding less than 51% in equities. This highlights their ability to deliver strong returns while managing risks in a well-planned manner.
Similarly, ICICI Prudential Multi Asset Fund beat 63% of equity schemes over three years and nearly 50% over five years. Their balanced approach—mixing equities, bonds, and alternatives—proves that you don’t need high equity exposure to achieve competitive returns. Consistency meets flexibility!
Conclusion
In a world of market fluctuation, best multi-asset funds range from being reliable to ready for anything all at once. They are described as a Swiss Army knife when it comes to finances. Because these funds balance risk and reward, they also help in adapting to changes and help keep a financial steady hand when the market doesn’t perform well.
Gone are those days when a single class was bet by even the experts. Now, an all-asset approach is not just recommended, but they are also considered the most intelligent option to choose in a time of raised interest rates and inflation markers, all while geopolitics degrade. Helped with offshore assets, now the tougher question is why lock on one single option? So are you prepared to confidently resolve uncertain scenarios? In the time of current market downturns, multi-asset funds just might be the key.
