Multi-Asset Approach: Comprehensive solution to balanced investing


Volatility seems to be the order of the day. Recently, there was the phase where market was volatile due to developments on the domestic political front following the general election results. Additionally, evolving geopolitical tensions and global growth concerns had further unsettled investors. Often, such phases do not go well with majority of investors which leads to unwarranted actions like redemption of investments. If you find yourself concerned, it’s time to consider the investment basics.
One of the tenants of investing is optimal asset allocation as per one’s risk profile. This ensures that the portfolio is spread across multiple asset classes in a manner which suits one’s financial requirement.It is here that the Multi-Asset Investing approach, an evergreen strategy, turns far more effective, relevant and fruitful.
As the name suggests, multi-asset investing means spreading your money across the asset classes – equity, debt, gold and real estate related instruments, in suitable proportion. This not only considerably dilutes the concentration risks; you also get benefits of multiple asset classes within a single portfolio. For instance, when equities do not perform, assets like debt and gold can offer stability and strong hedge against inflation. On the other hand, when debt and gold are under pressure, exposure to equities can very well make up for any notional losses.
However, due to lack of knowledge and time, investors may not find asset allocation to be a challenging task. This is where a multi-asset fund comesin handy. This fund is designed to invest a minimum of 10% each in three or more asset classes within a single fund. As a result, such a fund is well equipped to benefit out of any market cycles given their flexible approach to review their allocation to generate optimum yield as per the market situation.
One of the oldest offering in this category is the ICICI Prudential Multi-Asset Fund. With a track record of over 21 years, the fund has delivered a robust return of 21.39% CAGR, since inception. As of May 31, 2024 the fund has delivered an impressive return of 31.57% over one year and healthy CAGR returns of 22.24%, 19.45% over three years and five years respectively.
(The writer is Mutual Fund Distributor, J&K)

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