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What is a Multi-Asset Allocation Fund
Multi-Asset Funds are mutual fund schemes that invest across multiple asset classes. Typically, these funds comprise more than one asset class including equity, debt, gold, and even international equity to a portfolio.
Investments in different asset classes help reduce risk as different asset classes behave differently in a given time. For example, when the equity market is low, debt assets may provide a good return. Sometimes when both of these asset classes are on low, gold tends to do well. Moreover, when the Indian economy is in a fall, US equity may be on the rise.
A diversified portfolio ensures investors help reduce risk and enjoy fair returns.
Advantages of Multi-Asset Allocation Fund
There are several benefits associated with investing in Multi-Asset Allocation Funds.
- A Diversified Portfolio: These funds help investors to invest in various asset classes with various risks involved. A portfolio of mixed assets ensures lower risk and steady returns in different market situations.
- Allows Rebalancing of the Portfolio: Rebalancing ensures investments to be well-distributed in different asset classes offering better returns. In a volatile market, rebalancing a portfolio helps generate a comparatively moderate return.
- A Readymade Portfolio: It is hard for investors to create a diversified portfolio. Funds managers are experienced to create a well-balanced investment portfolio to enjoy the returns of different asset classes.
- Make Entry and Exit as Per Your Choice: There are no boundations either to enter the scheme or when you want to redeem your investments. However, 10% of the investments are free from exit load when redeemed within one year of the investment date. Moreover, you have to pay 1% as an exit load for the balanced funds required to be redeemed within one year of investment. However, there are no exit loads for any trading after one year.
Purpose of Multi-Asset Allocation Fund
Multi-Asset Class Funds increase the horizon of investments creating a diversified portfolio. Investments in several asset classes reduce risks when compared to investments in a single class of assets. Multi-Asset Allocation Fund Meaning and purpose can be well explained with an example. Suppose an investor holds multiple asset classes in the form of bonds, stocks, cash, gold, etc., while another investor only holds a single asset such as stocks. One asset class might outperform in a given market situation. But there are fewer chances of all the assets outperforming in a particular period.
Taxation Applicable on Multi-Asset Allocation Fund
Multi-Asset Allocation Fund is liable to tax as per Long-Term Capital Gains (LTCG), and Short-Term Capital Gains (STCG). When the investments are held for less than three years, they are taxed as STCG as per the investor’s tax slab. While for the investments held for more than three years, 20% of tax with indexation benefits is levied as LTCG.
How to Invest in Multi-Asset Allocation Through Nivesh
Any investor can enjoy the benefits of investing through Nivesh in the following easy steps:
- Create an account in Nivesh by providing your basic KYC details. (If you already have an account then just login into your account)
- On your portfolio page click on the Buy New tab at the right top corner of the screen.
- Select the category and choose the funds you want to purchase.
- If you already know the name of the fund to buy, then you can search the particular fund through Quick Order.
- Fill the transaction details and confirm. You can place up to 5 orders in one go.
- You can make payment through your registered account through UPI, Direct Pay, or NEFT/ RTGS , Bank Mandate or Cheque. For same-day NAV, select UPI, Direct Pay or NEFT / RTGS as other payment options may take a few days to clear, Nodal account takes about 1-2 days to clear payment from the approved mandate and cheque takes about 2-5 days in clearing due to which you will not get the same-day NAV.
Frequently Asked Questions (FAQs)
1. Are Multi Asset Allocation Funds Safe?
Multi-Asset Allocation Funds are considered to be comparatively safe investments as they hold different asset classes which allow for stability to be achieved in the portfolio. If one asset class is not doing well during a particular period, the other can perform.
2. How Does a Multi Asset Allocation Fund Work?
A Multi-Asset Fund is a combination of various types of asset classes including stocks, bonds, real estate, cash, gold, and even international equities. A diversified portfolio provides investors with a moderate return and risk on their investments.
3. What are the Benefits of a Multi Asset Allocation Fund?
The most important benefit of investing in Multi-Asset Allocation Funds is that they offer a diversified portfolio with risk and non-risk securities to help generate better returns in all types of market conditions.
