Multi asset allocation funds: Demand is rising as equities dip; know about them

All the major indices of the Indian equity markets are declining. There are a host of reasons from a massive $1.3 trillion economic stimulus in China attracting foreign institutional investors (FIIS) back to that country, uncertainties of US presidential elections, domestic financial institutions (DFIs) not stepping in to plug the gap left by FIIs etc.

In this situation, the markets are on a correction mode having gone down from the 85,800-odd levels on September 26 to about 78700 levels on November 4, 2024. With the bull run behind them, the Indian investors are already showing a rising demand for multi asset allocation funds. What are multi asset allocation funds? What are the best performing multi asset allocation funds? What returns have multi asset allocation funds provided? Let’s have a look.

What are multi asset allocation funds

These funds allocate a minimum of 10% of their assets to equities, debt and precious metals. They can also invest in other assets such as real estate that ensures ever more diversification of portfolio. Every step towards diversification reduces risk. Investment in one mutual fund scheme allows an investor to achieve diversification of portfolio.

Popular multi asset allocation funds & returns

Some of the biggest AMCs (asset management company) such as ICICI Prudential, Quant, HDFC, SBI, Edelweiss, Sundaram, DSP offer multi asset allocation funds. According to reports, ICICI Prudential multi asset fund provided 20.59% return in 3 years and 22.14% returns in 5 years. SBI Mutual Fund has provided 15.94% and 15.25% returns in 3 years and 5 years respectively while that from HDFC generated 14.39% and 16.96% over those periods.

Experts confirm rising demand

“As the name indicates multi asset allocation funds invest in equities, debt and precious metals such as gold and silver. The next one year to one-and-half years are expected to provide tailwind to these funds due to the presence of metals and debt instruments,” investment strategist Prasunjit Mukherjee, CEO of Plexus Management Services told News9live.com. Concurs Nilanjan Dey, director, Wishlist Capital. “We are witnessing increased demand from investors for multi asset allocation funds,” he confirmed. These funds hope to reap the fruits of the ongoing rally of gold and silver in global and domestic markets.