Unlocking investment potential: The case for multi-asset allocation funds
THE WEEK India|January 21, 2024
WITH THE CONFLICT RAGING in the Middle East, the equity markets in India and world over has turned volatile as investor sentiment has dampened over the past few weeks. You, too, might have pondered the question, “How should I protect the value of my investments, or how can I reduce erosion in portfolio value?” The answer could lie in multi-asset allocation funds. These funds have been gaining traction and are increasingly becoming a goto option for both seasoned and new investors.
VINOD KUMAR
Unlocking investment potential: The case for multi-asset allocation funds

Multi-asset allocation funds, a sub-category of hybrid funds, are a distinct type of mutual funds. These funds are specifically designed to invest in a diverse range of asset classes, which can include equities (stocks), debt (bonds), commodities like gold and/or silver, and real estate investment trusts (REITs). The primary aim of this offering is to combine these asset classes in a way that optimises returns while mitigating risk.

One of the most compelling reasons to consider multi-asset allocation funds is the ease of diversification they offer. Diversification is the investment strategy of spreading your money across various assets to reduce risk. With multi-asset funds, you do not need to agonise over creating the perfect asset mix. The fund manager does that for you. They dynamically allocate assets based on market conditions, aiming to balance the risk-reward trade-off. This simplifies your investment journey and ensures that your portfolio is well-rounded.

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