Go equity-heavy for higher returns, tax efficiency

Those within the category having lower equity allocation offer greater diversification and are less volatile

After the run-up in equities over the past year, investors are worried about losing their gains due to a reversal in the market's direction. They are keen to diversify into non-equity assets. Multi-asset allocation funds (MAAFS) have, hence, become popular in recent months.

Two new fund offers (NFOS) from this category are open currently-from Bank of India (February 7 to 21) and HSBC Mutual Fund (February 8 to 22).

Says Kailash Kulkarni, chief executive officer, HSBC Asset Management Company (AMC): "This scheme aims to spread risk and optimise performance to deliver risk-adjusted growth in the long run." Altogether 19 funds held assets under management (AUM) worth 60,324.8 crore at the end of January.

Where do they invest? Most funds in the category invest in equity and debt and in one or more asset classes, like gold, real estate, international equities, etc.

Says Chintan Haria, principal, investment strategy, ICICI Prudential Mutual Fund: "A multiasset scheme, by definition, is mandated to invest at least 10 percent each across three or more asset classes." Varied strategies Various AMCS offer diverse strategies within this space. ICICI Prudential Multi-Asset Fund, for instance, invests in equity, debt, commodities, REITs, InvITs, etc.

On January 31, its equity allocation stood at 57.5 percent.

WhitOak Capital MAAF invests in domestic equity (14-45 percent), gold (10-40 percent), fixed income (10-55 percent), foreign equity (010 percent), etc.