Are multi-asset funds a convenient option to get exposure to gold?

Are multi-asset funds a convenient option to get exposure to gold?

The New Fund Offer (NFO) by Nippon India Multi-Asset Fund could well be given a miss, as per financial planners. The high allocation to equity, added with debt taxation, will make this product a misfit for most investors in the market. 

As per financial experts, fund houses are taking the best advantage of the ongoing appetite in the market for gold and international equities and are packaging products accordingly.  Last month, Motilal Oswal Asset Management also launched a multi-asset fund. 

In the Indian market, multi-asset funds are yet to perform well. Individual investors want greater flexibility to be able to manage on their own, and a simple asset allocation gives that. 

The fund will hold lesser than 65 percent in the Indian equity market. Gains on the fund will be taxed like those in debt schemes. For investors who belong to the highest tax bracket, taxes on gains will be well over 30 percent when redeemed before three years. For equity mutual funds, capital gains tax will be 10 percent if sold after a year. 

Financial planners also stated that past performances of equity schemes like those of Nippon India Mutual Fund have been decently modest. On the other hand, Nippon Multi-Cap Fund and Nippon Large Cap Fund have underperformed over three- and five-year periods.

Investors are also now looking for safe products, which pretty much look like plain vanilla debt products. There is high risk because there is a minimum 70 percent allocation to equities. 

Investors who have low to moderate risk appetites use the multi-asset fund.