Top 10 Multi Asset Allocation Funds in 2024
Multi Asset Allocation Fund, in accordance with SEBI guidelines, distribute a minimum of 10% across three or more asset classes, such as equities, debt, gold, real estate, and commodities. This diversified portfolio allocation mitigates risk from volatility in any asset class and gives investors wide exposure, potentially leading to multi asset fund growth and favourable returns.
The allocation strategies within multi asset funds are at the fund manager’s careful discretion. They adjust investments based on thorough market conditions and analysis. This adherence to the principle of diversification offers flexibility to capitalise on varying market trends. For example, during market volatility, the manager may increase allocation to safer instruments like debt or gold, while in bullish markets, they may favour equity-linked schemes for optimal returns, ensuring your investments are in capable hands.
Top 10 Multi Asset Allocation Funds in 2024
Here is a list of the top 10 multi asset funds in India for 2024 based on their 1Y Returns and 5Y CAGR:
| Fund Name | AUM (in Cr.) | CAGR 3Y (%) | Expense Ratio | CAGR 5Y (%) |
|---|---|---|---|---|
| ICICI Pru Multi-Asset Fund | 50,648.49 | 20.95 | 0.69 | 21.56 |
| Kotak Multi Asset Allocation Fund | 7,485.05 | 0.00 | 0.31 | 0.00 |
| SBI Multi Asset Allocation Fund | 6,843.12 | 15.70 | 0.5 | 15.38 |
| Nippon India Multi Asset Allocation Fund | 4,683.26 | 17.39 | 0.29 | 0.00 |
| UTI Multi Asset Allocation Fund | 4,682.25 | 19.67 | 0.6 | 16.83 |
| HDFC Multi-Asset Fund | 3,817.76 | 13.93 | 0.74 | 16.63 |
| Aditya Birla SL Multi Asset Allocation Fund | 3,664.46 | 0.00 | 0.59 | 0.00 |
| Tata Multi Asset Opp Fund | 3,430.75 | 15.91 | 0.5 | 0.00 |
| Quant Multi Asset Fund | 3,152.60 | 22.75 | 0.62 | 29.64 |
| Sundaram Multi Asset Allocation Fund | 2,442.26 | 0.00 | 0.21 | 0.00 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The data on the list is from 19th December, 2024. However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!
Overview of the Multi Asset Allocation Funds in India 2024
ICICI Prudential Multi-Asset Fund
Managed by ICICI Prudential Asset Management, a joint venture between ICICI Bank and Prudential Plc, this fund aims to generate multi asset fund growth by predominantly investing in equities and ensuring portfolio allocation through other asset classes. With a Sharpe Ratio of 2.06, it demonstrates strong risk-adjusted returns. The fund has an expense ratio of 0.69%, and an exit load of 1.00% for redemptions within the specified period.
Kotak Multi-Asset Allocation Fund
This fund, managed by Kotak Mahindra AMC, leverages a diversified portfolio comprising equity, debt, and commodities, including ETFs and commodity derivatives, to achieve long-term capital appreciation. With over 21 lakh investors, the fund reflects trust and reliability. It has a Sharpe Ratio of 1.62, an expense ratio of 0.31%, and an exit load of 1.00%.
SBI Multi-Asset Allocation Fund
Backed by SBI Funds Management’s three decades of experience, this fund invests across multiple investment avenues to provide investors with an actively managed, diversified portfolio. With its strong lineage linked to SBI, India’s largest bank, the fund offers consistent value creation. It features a Sharpe Ratio of 1.56, an expense ratio of 0.50%, and an exit load of 1.00%.
Nippon India Multi-Asset Allocation Fund
As part of Nippon India Mutual Fund, one of India’s leading fund houses, this scheme aims for long-term capital growth through equity, debt, and commodity-linked investments, including Gold and Silver ETFs. With a Sharpe Ratio of 1.91, it provides good risk-adjusted returns. The fund charges a competitive expense ratio of 0.29% and imposes an exit load of 1.00%.
UTI Multi-Asset Allocation Fund
UTI AMC, promoted by four major institutions (SBI, LIC, BOB, and PNB), offers this fund to achieve long-term capital appreciation through a balanced portfolio of equity, gold ETFs, and debt instruments. It has the highest Sharpe Ratio of 2.29 among its peers, indicating superior risk-adjusted performance. The expense ratio stands at 0.60%, with an exit load of 1.00%.
What is a Multi Asset Allocation Fund?
Multi-asset allocation funds are investments that combine different types of assets, such as stocks, bonds, and real estate, into a single fund. These funds use sophisticated algorithms to adjust their investments based on market conditions, aiming to maximise returns while minimising risk.
Now that we understand what is multi asset allocation fund entails, let’s explore some of the best multi asset funds and best multi asset income funds based on their 1Y Returns and 5Y CAGR.
How do Multi Asset Allocation Funds Work?
Multi-asset allocation funds invest in diverse asset classes to effectively manage investment risk. Fund managers continuously monitor and adjust asset allocation based on economic indicators and market trends. This approach ensures these funds are among the best mixed asset funds for investors seeking stability and growth.
Diversification helps mitigate the impact of volatility. SEBI mandates that multi asset funds invest at least 10% in three asset classes. Investors benefit from a professionally managed portfolio offering a unique blend of asset classes, eliminating the need for individual investment research. These funds aim to combine the hedging benefits of gold, stability of fixed earnings, and growth potential of equities, enhancing overall investment experience and minimising return volatility. By investing in multi asset funds, you can achieve an optimal balance between risk and returns.
Purpose of Multi Asset Allocation Funds
These funds aim to enhance and diversify investment portfolios by allocating assets across multiple classes. This strategy helps cushion the risks associated with investing in a single asset class, making them some of the best asset allocator funds available today.
Features of Multi Asset Allocation Funds
Here are a few key features of Multi Asset Allocation Funds:
- Diversification: SEBI mandates a minimum 10% investment across three or more asset classes, ensuring investors access various assets within one scheme. This makes multi asset funds stand out as among the top multi asset funds. Investors should carefully review scheme documents and align investments with their goals.
- Fund Manager’s Role: In multi asset funds, the fund manager plays a crucial role in determining investment style and type. Their autonomy is higher due to the fund’s diversity. Investors should assess the fund manager’s track record and experience to find the best mixed asset funds for their needs.
- Returns: Even the top 10 multi asset funds in India do not guarantee returns, and market conditions can affect performance, even in debt-focused funds. Now that you know what is multi asset fund, investors must plan to invest in it according to their long-term financial objectives.
Factors to Consider While Investing in Multi Asset Allocation Funds
Here’s what to keep in mind when you consider investing in multi asset allocation funds:
- Investment Duration: Aim for medium to long-term investments, ideally over 3-5 years, avoiding short-term goals. This approach works well when investing in multi asset index funds or the best multi asset income funds.
- Financial Objectives: Assess your goals and ensure they align with the fund’s focus on balanced growth and stability rather than high returns. For those looking to generate consistent income, consider the best multi asset income funds for portfolio stability.
- Risk Tolerance: Determine if you’re comfortable with the fund’s conservative risk profile or if you seek higher returns with increased risk.
- Cost Analysis: Understand the fund’s expense ratio and potential impact on your net returns due to active management fees.
- Performance History: Review the fund’s past performance for consistency, though it does not guarantee future results.
- Fund Manager Expertise: Investigate the manager’s background and track record in managing diversified investments. The best multi asset funds are often led by seasoned fund managers who excel in making prudent multi asset selection fund decisions.
Who Should Explore Multi Asset Allocation Funds?
Investors seeking stable returns without high risk can benefit from investing in a Multi-Asset Allocation Mutual Fund. The best multi asset funds offer diversification across various financial instruments, making it suitable for at least five years of long-term investments. Investors can opt for either an equity-focused or debt-focused Multi Asset fund depending on their risk tolerance and investment objectives. While equity-linked schemes offer the potential for higher long-term gains, they come with increased risk. Conversely, debt-oriented schemes provide stability for investors seeking consistent returns.
How to Choose the Best Multi Asset Allocation Funds?
When selecting the best multi-asset allocation funds for your investment portfolio, consider the following factors:
- Investment Objective: Determine your investment goals, whether it’s capital appreciation, income generation, or a balanced approach. Look for multi asset funds that align with your objectives.
- Asset Allocation Strategy: Evaluate the fund’s asset allocation strategy, which typically includes a mix of equities, bonds, and other asset classes. Ensure the strategy is well-diversified, as seen in top multi asset fund direct growth options.
- Fund Performance: Analyse the fund’s historical performance, focusing on long-term returns and consistency. Look for funds with competitive returns relative to their benchmarks and peers.
- Fund Manager Expertise: Assess the fund manager’s expertise and track record. A skilled and experienced manager can significantly improve fund performance and asset allocation decisions.
- Expense Ratio: Consider the fund’s expense ratio, which represents the annual fees charged by the fund. Lower expense ratios can contribute to higher net returns for investors over time.
- Risk Management: Evaluate the fund’s risk management practices, including measures to mitigate downside risk and volatility. The best multi asset funds employ robust risk management techniques to protect investors’ capital.
- Fund Size and Liquidity: Consider the fund’s size and liquidity, as larger funds may offer better economies of scale and liquidity benefits. Ensure that the fund’s size is appropriate relative to its investment strategy.
How to Invest in Multi Asset Allocation Funds?
Investing in Multi Asset Allocation Funds offers diversification benefits by spreading investments across asset classes like equities, bonds, and commodities. Here’s how you can invest in these funds:
- Research: Research different Multi Asset Allocation Funds available in the market using the Tickertape Mutual Fund Screener. Look into their investment objectives, asset allocation strategies, historical performance, and fund manager expertise.
- Assess Risk Appetite: Determine your risk tolerance and investment goals. The top 10 multi asset funds in India come in different risk profiles, ranging from conservative to aggressive. Choose a fund that aligns with your risk appetite and financial objectives.
- Analyse Performance: Evaluate the fund’s historical performance across different market cycles. Look for consistency in returns and how the fund has performed relative to its benchmark and peers.
- Consider Fund Manager Expertise: Assess the experience and track record of the fund manager. A skilled and experienced fund manager can effectively navigate market volatility and make informed investment decisions.
- Review Fund Fees: Understand the fund’s fee structure, including management fees, expense ratios, and other charges. Compare fees across different funds to ensure you get value for your investment.
Investing in Multi Asset Allocation Funds via smallcase
You can also invest in Multi Asset Allocation Funds via smallcase. Simply go to smallcase.com or the smallcase app, and login via your phone number. Then, go to ‘Discover‘ and enter the name of the specific mutual fund name in the search bar and hit enter. You’ll find the performance of the mutual fund and the minimum investment amount. Decide the particular amount you want to invest based on your financial goals and click on ‘Invest now’.
How do Multi Asset Allocation Funds Generate Returns?
Multi asset allocation Funds, also known as MAAPs, generate multi asset allocation fund returns through strategic diversification across multiple asset classes. These funds actively allocate investments across equities, fixed-income securities, commodities, and other assets to optimise returns while managing risks.
- Dynamic Asset Allocation: Multi Asset Allocation Funds dynamically adjust their asset allocation based on market conditions and economic outlook. Fund managers continuously assess various asset classes’ performance and reallocate investments accordingly to capitalise on opportunities and mitigate risks.
- Capitalising on Market Trends: Fund managers leverage market trends and economic indicators to identify attractive investment opportunities. By analysing macroeconomic factors such as interest rates, inflation, and global market trends, they adjust asset allocation to maximise returns in different market scenarios.
- Risk Management Strategies: These funds, especially the top 10 multi asset funds in india employ risk management strategies to protect investors’ capital during market downturns. This includes diversification across asset classes, geographical regions, and investment styles to minimise portfolio volatility and preserve capital.
- Active Fund Management: Fund managers actively monitor and rebalance the fund’s portfolio to ensure optimal asset allocation. They may reallocate investments between equities, bonds, real estate, and alternative assets based on changing market conditions and investment opportunities.
- Flexibility and Adaptability: Multi-asset allocation funds can invest in a wide range of asset classes and investment instruments. This flexibility allows fund managers to adapt quickly to changing market dynamics and capitalise on emerging opportunities to generate returns.
Benefits of Investing in Multi Asset Allocation Funds
Investing in Multi Asset Allocation Funds offers key advantages that include:
- Enhanced Diversification: These funds mitigate risk by spreading investments across multiple asset classes and yield consistent returns across various market cycles.
- Automated Portfolio Rebalancing: Rather than manually adjusting portfolios, fund managers handle the task, ensuring alignment with market conditions and investment objectives.
- Customised Portfolios: Multi-Asset Allocation Mutual Funds leverage industry research and market monitoring to construct well-balanced portfolios tailored to optimise returns.
- Flexible Entry and Exit: Investors can enter and exit the fund without incurring charges. Additionally, partial redemptions within the first year are permitted without penalties, making these funds suitable for both short-term and long-term investors.
Risks of Investing in Multi Asset Allocation Funds
Investing in the best multi asset allocation funds has its limitations. Before investing, it’s essential to understand the following drawbacks:
- Understanding the Investment: Multi asset allocation funds spread investments across different asset classes, making tracking challenging. This complexity can obscure specific risks and allocation strategies, making it hard to anticipate performance in varying market conditions.
- Growth Potential vs. Stability: While multi asset funds offer risk reduction through diversification, this diversification can limit growth potential. They often don’t yield the high returns of riskier, more focused investments, particularly in bullish markets.
- Expense Ratios: Managing multi asset funds typically incurs higher costs due to constant rebalancing and monitoring. These expenses can diminish overall returns, prompting careful consideration of whether the potential for reduced volatility justifies the added cost.
Taxability of Multi Asset Allocation Funds
Multi Asset Allocation Funds have varying equity exposure, leading to differing tax implications on returns. Amendments to the 2020 Budget dictate that investors are taxed based on their fund’s classification. According to the recent changes in multi asset fund taxation, funds with over 65% equity exposure are taxed as equity-oriented, while those with lower exposure are taxed akin to debt funds.
To Wrap It Up…
Now that you know what are multi asset funds, your ideal asset allocation hinges on your unique situation. This includes your own age, investment goals, time frame, and risk tolerance. Multi asset allocation funds offer a diverse and comprehensive investment strategy, especially suitable for investors with lower risk tolerance or minimal time for active management. This might be an attractive benefit for investors wishing to diversify their portfolios. However, it is absolutely essential for investors to conduct their own market research and consult a financial advisor before investing in anything.
Frequently Asked Questions(FAQs) on Multi Asset Allocation Funds
Multi-asset allocation funds are investments that combine different types of assets, such as stocks, bonds, and real estate, into a single fund. These funds use sophisticated algorithms to adjust their investments based on market conditions, aiming to maximise returns while minimising risk.
Multi Asset Allocation Funds provide access to diverse asset classes, adjusting their mix based on predefined rules to achieve an optimal blend. They usually suit investors with a horizon of at least 5 years.
Multi Asset Allocation Funds determine their investment allocation based on chosen asset classes. The fund also determines the percentage allocation to each class and sets thresholds for transferring funds between classes.
Investors seeking alternatives to fixed income or slightly higher returns with lower risk can opt for multi-asset allocation funds. These funds spread investments across various asset classes, making them suitable for beginners and those with limited financial expertise.
Multi Asset Allocation Funds have varying equity exposure, leading to differing tax implications on returns. Amendments to the 2020 Budget dictate that investors are taxed based on their fund’s classification. Funds with over 65% equity exposure are taxed as equity-oriented, while those with lower exposure are taxed akin to debt funds.
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