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What is this episode about?
With equity markets up one day and down the next, most investors are understandably nervous about deploying into pure equity funds. Then there’s the eternal question of whether equity markets are overvalued or bottoming out and ‘is this a good time to invest?’.
Multi asset allocation funds appear to offer the perfect answer, switching between equity, debt and commodities based on the relative attractiveness of each asset class. So are these funds indeed a good solution?
In this episode of the Prime Podcast, hosts Vidya Bala and Bhavana Acharya dig into explain how this category came into being and how they have evolved. They explain why there isn’t a single approach these funds take and the differences that can be found. They then get into performance and suitability. This episode will help you understand:
- The different approaches that multi asset allocation funds can take
- How these funds have delivered, what works and what doesn’t
- How you can use these funds in your portfolio and how not to use them
Key segments in this podcast:
- Intro
- The history of multi-asset allocation funds (1:30 – 05:50)
- How multi asset funds manage their allocation (5:50 – 15:50)
- Performance of multi-asset funds (15:50 – 21:05)
- Suitability of these funds (21:05 – 27:30)
- How to select multi- asset funds (27:30 – end)
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3 thoughts on “Prime Podcast: All you wanted to know about multi-asset allocation funds”
Thank you for another excellent podcast. As you mentioned only a few funds stick true to the multi-asset theme. I think you should have called out these funds clearly because they’re the only ones you should consider investing because there are better alternatives for other cases.
You had mentioned about funds hedging their equity positions, I would like to call out one fund Edelweiss MAF which fully hedges it’s positions and behaves like a debt fund with equity like taxation if held for over 2 years. I’m surprised there are no other MAFs following this strategy.
No, it’s not necessary that you invest only in true multi-asset funds. Even if a fund tends towards equity, but hedges and therefore is a low-risk equity option, they are perfectly fine to be investing in. You just need to know what the fund does, first (ie, low risk equity, high commodity, good allocation to all 3 asset classes etc) and then be aware of the reason you’re investing in that fund so that it fits your purpose. The Edelweiss fund you mentioned, for example, is not multi asset by any stretch, but those looking for debt+gold exposure in one fund with some tax efficiency may want it. – thanks, Bhavana
Thank you for responding. My point is there are plenty of hybrid/balanced options. MAAF is relatively new, so why invest there instead of hybrid options with a much longer track record if the objective is low-risk equity. I pointed out Edelweiss because that also doesn’t stick to the MAAF theme but at least it’s a unique case without an alternative in other fund categories (Arbitrage is the closest).