Due to triple digit returns in the last few months and the hope that this mania will not end soon, investors turned to silver heavily. But in a single trading day, silver prices fell by a whopping 25 percent, causing panic among the investors. Investors who were wary of silver chose gold, whose prices have also fallen by about 10 percent in the last few trading sessions. Investors ignored the advice of market experts. Silver and gold are highly These metals are considered volatile and betting only on these metals is against investment rules.
Market experts say investors should instead opt for mutual funds that offer a mix of investments in commodities and equities, thereby diversifying, reducing risk and creating a more balanced portfolio, such as multi asset allocation mutual funds.
What are Multi Asset Allocation Funds?
Multi asset allocation funds invest in at least three different asset classes such as equity, debt and commodities, including gold and silver. As per the guidelines set by market regulator SEBI, multi asset allocation funds are mandated to invest at least 10% across the three asset classes. Fund managers have the freedom to decide the investment mix based on the performance of the asset classes at any time. Multi Asset Allocation Funds have given excellent returns in the last few years. Among them, Nippon India Multi Asset Allocation Fund leads the way. It has given returns of 23.97%, 20.47% and 22.62% in one, two and three years respectively. In fact, the top 10 Multi Asset Allocation Funds have given an average of 20.26% in the last one year and 21.01% in three years. In comparison, the returns of the top 10 equity funds have been only 16.62% in the last one year.
This is how you get better returns
The performance of multi asset allocation funds was boosted by rising precious metal prices, which provided investors with an opportunity for diversification at a time when equity markets were volatile and returns from debt instruments were relatively low. Multi asset allocation mutual funds have also outperformed hybrid funds. Apart from providing diversification across different asset classes, multi asset allocation funds also provide convenience to investors as they can invest in equity, debt and commodities by investing in a single fund.