The Mutual Fund Show: What Investors Get In Multi-Asset Schemes

Amid a record-breaking performance in the Indian equity market, Sundaram Mutual Fund has launched a new multi-asset allocation fund.

The portfolio will feature 25% investment in gold among commodities, while 65% investment will be in equity shares from the Nifty 500 index, and the remaining 10% will consist of a Nifty short duration bond.

"I think this is a good long-term strategy to adopt, given that multi-asset allocation funds are part of hybrid category targeting moderate investors, who want long-term inflation beating and fixed income beating returns with low risk," Sunil Subramaniam, managing director of Sundaram Mutual Fund, told NDTV Profit.

This is a good choice for those looking to save on taxes, he said. The fund is also an "all-weather fund" and the timing or the performance of equity markets will not have any major impact as gold, equity, and debt will help balance the risks, Subramaniam said.

Explaining the rationale behind inclusion of gold as the sole commodity in the fund, he said that gold is a "long-term shock absorber", offers good returns when equities are negative, and gives benefit of currency depreciation. Given the performance of gold over the last year, "every equity investor should have gold in their portfolio".

"If you make 8-9% returns on a post-tax basis from multi-asset fund, with reduced volatility due to the debt component because of gold components, then it will be the right choice for many, many traditional investors in India," said Amol Joshi, founder of PlanRupee Investment Services.

Indian investors are still heavily dependent on fixed income funds and are looking at ways to preserve purchasing power and get some more returns despite inflation. he said.

According to Joshi, if an investor has invested in a fund, then he should stick to it for an entire cycle. Investors should check the portfolio allocation only once a year and not change it every month, he said.