The portfolio of the Indian Mutual Fund Sector has introduced a new classification of investment called as Multi-Asset Fund. But the commonly-known term is the Asset Allocation Fund by the Financial Advisors and Fund Managers in the Actual Practice.
The practice of investing in different asset classes is called Multi-Asset Funds. The asset classes such as debt, gold, and equity assets when invested as a whole comes under the purview of multi-asset funds, and recently the acquisition of international equity asset classes has also been added to the category. The merit of investing in various asset classes can be derived from the multi-asset fund schemes.
The multi-asset fund scheme helps the investors to reduce risk in investment. The reason behind the approach over the multi-asset fund is the effect and reaction of the various asset classes during different stages of economic growth. For instance, when other classes of assets go in crashing, the gold assets tend to withstand with its value at any point in time.
And the investors can ensure that they are not dependable on the functioning of a single asset class. When the debt asset is at the high end, the equity may see a downfall. Similarly, international equity will be giving good returns, whereas the Indian equity portfolio crashes and vice versa.
Another important point the investors must understand is that the returns from the diverse form of investment will be low as the risk factor is also lesser. In the long run, the investors can only expect only 9 to 10% of returns whichever is considered to be higher.
There will be a contradiction when it comes to the satisfaction of the asset allocation requirement even though the scheme is enabled for the process of varied investment. This phenomenon is due to the reason that the mutual funds being focused as normal benchmark asset, cannot provide the investors with a materialized answer for that. The investors are gifted if their asset allocation requirement matches their scheme. Therefore, the investors shouldn't think that the asset allocation strategy will not be taken care of by the multi-asset fund schemes.
The short-term investment options are not possible in the multi-asset funds. The investors must invest in the multi-asset funds at least for a period of seven to ten years. And the investors cannot expect higher returns in the multi-asset funds.