investing in mutual fundsImage Credit source: ai generated
The last six months have been full of ups and downs for investors. First the equity markets fell and then due to tensions with Iran the global equity markets fell rapidly. Distressed investors started buying gold and silver, as there is an inverse relationship between gold and equities. Generally, when equity prices fall, gold prices rise and vice versa. But this time history was not repeated.
In the last six months, gold prices have fallen by about 20% and silver prices by 43%. During the same period, Sensex recorded a decline of 11% and Nifty recorded a decline of 8.6%. A stronger dollar and signs of US Federal Reserve not cutting interest rates put pressure on gold and silver, while equity markets also remained under pressure due to the Iran war.
This is how I got a huge return of 20%
In such a situation, Multi Asset Allocation Fund has given better returns to investors. In the last few years, Multi Asset Allocation Funds have given higher returns than Equity Mutual Funds and their performance has been good in the last 6 months also. Leading this list is Nippon India Multi Asset Allocation Fund, which has given an annual return of 19.92% in the last 3 years. The annual returns of multi asset funds of SBI, Motilal Oswal and Aditya Birla Sun Life in the last 3 years have been 17.50%, 13.90% and 17.40% respectively. Market regulator SEBI has a rule that there should be at least 10% allocation in each of the three asset classes. Take for example Nippon India Multi Asset Allocation Fund, which has the highest assets under management (AUM) in this category.
where is your money invested
The advantage of multi-asset allocation funds is that money is invested in different asset classes. This reduces the risk of investing all the money only in assets that have performed well in the past, and also avoids the mistake of not investing in assets that are currently less popular. These funds are great for investors as they provide diversification without the need to manage multiple funds or rebalance the portfolio from time to time.
What do market experts say
Market experts say that if there is ever a right time to diversify your portfolio (make different types of investments), it is now. This is where multi-asset allocation mutual funds come in handy. These funds are hybrid mutual funds which invest in at least three types of asset classes (investment instruments), which include equity, debt and commodity. Multi Asset Allocation Depending on the fund’s strategy, the portfolio may include equities, fixed-income securities, gold or other commodities, and real estate investment trusts (REITs). A major advantage of multi-asset funds is diversification. Since different asset classes perform differently over time, investing in them can help balance risk and return.
