Why have multi-asset MFs beaten equity funds this year?
Multi-asset allocation funds that invest in a mix of three or more asset classes have been top performers over the past one year, outpacing pure equity funds, surprising many investors.
WHAT ARE MULTI-ASSET ALLOCATION FUNDS?
Multi-asset allocation funds are hybrid mutual funds that invest in at least three different asset classes, like equity, debt, and commodities (gold/silver), with a minimum allocation of 10% to each of them. In addition to this some schemes also invest in international stocks, or international fund of funds (FoF), REITs and Invits. Fund managers actively shift allocations to asset class based on economic outlook, interest rates, and risk return potential, moving more into debt or gold when they think equity will underperform and increasing equity during growth phases.
HOW MANY MULTI-ASSET FUNDS DOES THE INDIAN MF INDUSTRY HAVE?
The mutual fund industry has 32 schemes managing assets worth Rs 1.57 lakh crore.
WHY HAVE MULTI-ASSET ALLOCATION FUNDS BEEN BEST PERFORMERS AND AHEAD OF EQUITY FUNDS?
Data from Value Research shows that the multi-asset category has returned an average of 16.1% in the last one year, with the top performer returning 24%. Multi-asset allocation funds have performed well due to their allocation to gold and silver which have seen a sharp rally during the year. In rupee terms, silver prices have run up 138% over the last one year, while gold has rallied 76%. With most multi-asset funds having a 10-25% exposure to precious metals, they ended up beating equity funds, returning 12.6% over the last one year.
WHO SHOULD OPT FOR MULTI-ASSET FUNDS?
Retail investors who find it difficult to decide how much to allocate to different assets and when to buy or sell can opt for multi-asset funds. They also work for investors who want all asset classes in one scheme and do not want the hassles of buying them separately giving investors automatic asset allocation.
HOW ARE MULTI-ASSET FUNDS TAXED?
In the case of equity-oriented multi-asset funds that invest 65% or more in Indian equities, a investor pays short term capital gains tax of 20% if held for less than a year and long term capital gains tax of 12.5% if held for more than a year, with an annual tax exemption of Rs 1.25 lakh. Non-equity-oriented multi-asset funds that have 35-65% in equites are treated differently. Here, short-term gains are taxed based on your income slab, while long-term gains are taxed at 12.5%, after holding for more than 24 months.
WHAT ARE MULTI-ASSET ALLOCATION FUNDS?
Multi-asset allocation funds are hybrid mutual funds that invest in at least three different asset classes, like equity, debt, and commodities (gold/silver), with a minimum allocation of 10% to each of them. In addition to this some schemes also invest in international stocks, or international fund of funds (FoF), REITs and Invits. Fund managers actively shift allocations to asset class based on economic outlook, interest rates, and risk return potential, moving more into debt or gold when they think equity will underperform and increasing equity during growth phases.
HOW MANY MULTI-ASSET FUNDS DOES THE INDIAN MF INDUSTRY HAVE?
The mutual fund industry has 32 schemes managing assets worth Rs 1.57 lakh crore.
WHY HAVE MULTI-ASSET ALLOCATION FUNDS BEEN BEST PERFORMERS AND AHEAD OF EQUITY FUNDS?
Data from Value Research shows that the multi-asset category has returned an average of 16.1% in the last one year, with the top performer returning 24%. Multi-asset allocation funds have performed well due to their allocation to gold and silver which have seen a sharp rally during the year. In rupee terms, silver prices have run up 138% over the last one year, while gold has rallied 76%. With most multi-asset funds having a 10-25% exposure to precious metals, they ended up beating equity funds, returning 12.6% over the last one year.
WHO SHOULD OPT FOR MULTI-ASSET FUNDS?
Retail investors who find it difficult to decide how much to allocate to different assets and when to buy or sell can opt for multi-asset funds. They also work for investors who want all asset classes in one scheme and do not want the hassles of buying them separately giving investors automatic asset allocation.
HOW ARE MULTI-ASSET FUNDS TAXED?
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