5 Cricketing Parallels To Understand Multi Asset Funds Better

Cricket is the most celebrated sport in India. And with IPL, cricket followers have increased, making it one of the premier sports globally. Drawing a few cricketing parallels to investing - let us try to understand multi asset funds, a little better.

- Umang Thaker

Choosing the right mix of players

While different conditions require different combinations of players, an ideal combination which works across conditions is a mix of batsmen, 2-3 all-rounders, bowlers and a wicket keeper. In some formats the limitation of having only 4 international players make it imperative that the choices are made even more carefully. So you may have a squad of 20-25 players – the choice of the playing eleven - against a particular opposition - will make all the difference.

Similarly in investing, choosing across the spectrum of asset classes, in different proportions, helps create a good portfolio. A combination of Domestic Equity, International Equity, Debt, and Gold which could help, with each category playing a different role in the portfolio. Debt helps reduce volatility while equity can generate alpha, international exposure provides geographical diversification and gold plays a hedge against inflation/geo political events; thereby increasing the likelihood of better-riskadjusted returns.

Different conditions, Different bowlers – Different economic conditions, different allocations