Hybrid funds invest in equity and debt securities. In multi-asset funds, this feature is taken a step ahead. They invest in an extra asset class. This helps reduce the market risk linked with the investment portfolio.
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Multi asset allocation funds are a category of hybrid mutual funds. As the name implies, these funds invest in multiple asset classes like equity, debt, gold and so on.
According to SEBI, the funds invested in each asset class must be a minimum of 10%. Allocation in these funds is based on the principal that positive correlation between various assets class are low. Lower positive correlation ensures that these asset classes will not move in the same direction.
See Also: What is Meant by Asset Allocation?
Short term capital gains (STCG) are considered as normal income and are taxed according to the investor’s tax slabs. Long term capital hands (LTCG) are taxed at 10% with indexation and at 20% without indexation.
See Also: Why Invest in a Mutual Fund?
Although diversification of assets is an advantage, the risk involved in each type of asset is applicable to the mutual fund as well. The market risk involved in equity funds and interest rate risk of debt funds does influence the returns. If the fund manager lacks the required expertise, then selection of funds might go wrong, which in turn affects the performance of the fund. It is important to ensure that the objectives of the investor and the fund are synchronized.
See Also: What is Portfolio Rebalancing? Steps to Rebalance Your Portfolio
Fund Name |
AUM (Crores) |
3 Year Returns |
5 Year Returns |
Axis triple advantage |
Rs 303 |
12.10% |
8.90% |
ABSL financial planning FOF aggressive |
Rs 121 |
9.04% |
8.66% |
SBI multi asset allocation |
Rs 253 |
8.24% |
9.17% |
ICICI prudential multi asset fund |
Rs 11,902 |
8.37% |
8.08% |
HDFC multi asset fund |
Rs 221 |
7.18% |
7.56% |
Multi-asset allocation funds are an ideal investment if the investors have a low profile. The first time investors, who would like to experience equity or debt funds, without exposing themselves completely to the risk involved, can invest in these mutual funds.
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