Why Should You Invest in Multi Asset Allocation Fund :As the new year is approaching, the time is also approaching to take strong decisions so that the foundation of a financially secure future can be laid. One such powerful resolution is to increase your wealth by 2025 by leveraging the power of 3 through a multi-asset fund. Multi Asset Fund A well-diversified portfolio with different asset classes can provide strong risk adjusted returns, allowing you to weather any setbacks well on your way to becoming financially successful. Baroda BNP Paribas Mutual Fund has given information in its report on Multi Asset Allocation Strategy.
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What is Multi Asset Allocation Fund?
Multi-asset allocation funds provide investors with a diversified portfolio through a single investment. Apart from equity, debt, gold, their investments are in asset classes like real estate. It is this specialty that gives them the ability to provide the best risk-adjusted returns to investors.
The objective of these funds is to grow and diversify the investment portfolio through multi-asset allocation across multiple asset classes. The fund aims to minimize the risk associated with investing in only one asset class.
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With stability and high growth opportunities
What makes a multi-asset fund different is that it gives fund managers the freedom to optimize the portfolio. For example, in the equity segment, fund managers can invest in largecap, midcap and smallcap stocks, thereby ensuring the right mix of stability and high growth opportunities. Similarly, in the debt segment, the fund manager can adjust the duration depending on market conditions and invest in government securities or high quality corporate bonds. In other words, just like a multi vitamin tonic contains micronutrients and trace minerals/elements, a multi asset fund allows one to address all the deficiencies in a single investment option.
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Why invest in multi asset funds?
According to Baroda BNP Paribas Mutual Fund, multi-asset funds provide a one-stop solution for building a complete portfolio. Balanced allocation across asset classes minimizes risks, ensuring consistent and stable returns. Multi asset funds take advantage of the fact that asset classes often perform differently under different market conditions.
Historically, data shows that investing in gold with equity and fixed income allocations improves portfolio performance. This strategy reduced the probability of negative returns, while increasing the probability of returns of more than 10 percent. While past performance does not guarantee future results, the analysis shows that gold is an effective option for diversifying a portfolio and can contribute significantly to portfolio performance.
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“Multivitamin” for investment portfolio
Baroda BNP Paribas Mutual Fund Citing the example of Baroda BNP Paribas Multi Asset Fund, it said that since its inception, this fund has given strong returns of 19.98 per cent per annum, which is better than its benchmark’s return of 18.91 per cent per annum. Compared to better performance. This fund was started on 19 December 2022. The objective of this fund is to take advantage of the uptrend in each asset class, while minimizing portfolio losses during market fluctuations.
Baroda BNP Paribas Multi Asset Fund combines the growth potential of equity, stability of debt, diversification of gold and income potential of units of REITs/InvITs. This mixture works as a multivitamin for portfolio. Talking about portfolio allocation till November 30, 20024, about 69 percent investment is in equity, 15 percent investment is in gold and 16 percent investment is in debt and cash.
(Source: *Data from April 2002 to November 30, 2024, returns are daily 3-year rolling averages calculated on a daily basis from April 30, 2005 to November 30, 2024.)
