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After an exceptional year for equities and a gold rally in 2023, fund houses are increasingly promoting multi-asset allocation funds. These funds, historically praised for their risk-mitigating properties, offer pre-balanced exposure to diverse asset classes like equities, bonds, and gold. And are gaining traction as a prudent approach to navigate uncertain market conditions.
In 2023, Multi-asset funds saw a net inflow of about Rs 20,000 crore, which has been the third-highest inflow among various mutual fund categories, after small and mid-cap funds.
Sundaram Mutual Fund a significant player in the fund management space with a bouquet of 16 equity, 5 hybrid and 9 fixed-income funds is catering to diverse investor preferences. Recently, it has launched – Sundaram Multi Asset Allocation Fund.
It is an open-ended open-ended scheme investing in Equity, Debt & Money Market Instruments and Gold ETFs.
Accordingly, the investment objective of the scheme is to generate long term capital appreciation by investing in Equity & Equity related Securities, Debt & Money Market Instruments and Gold ETFs. However, there is no guarantee or assurance that the investment objective of the scheme will be achieved.
[Read: How a Multi-Asset Fund Can Protect Your Portfolio at a Market High]
Under normal circumstances, Sundaram Multi Asset Allocation Fund will hold an allocation of 65% to 80% in equity and equity related instruments, 10% to 25% in Debt and Money Market Securities and 10% to 25% in Gold ETFs as permitted by SEBI from time to time.
As per the Scheme Information Document, by diversifying across three asset classes, the Sundaram Multi Asset Allocation Fund aims to provide stable returns regardless of the uncertain market conditions. Of these, it would be more concerned with gold and equity.
Since SMAAF will invest at least 65% in equities, it will benefit from equity taxes even though it is a multi-asset allocation fund. The plan will allocate a minimum of 10% to fixed income instruments and a maximum of 25% to gold.
The scheme's biggest advantage is how diverse it is. Since the fund invests in a variety of asset classes, its net asset value (NAV) won't be negatively impacted by a significant decline in the performance of a single asset class, such as equity. The exact allocation in various asset classes and schemes would be decided based on the fund manager’s outlook on prevalent market conditions and changing business environment.
Sundaram Multi Asset Allocation Fund’s performance will be benchmarked against NIFTY 500 TRI (65%) + NIFTY Short Duration Debt Index (10%) + Domestic Prices of Gold (25%)
The scheme will be managed by Mr. Rohit Seksaria & Mr. S Bharath (Equity), Mr. Dwijendra Srivastava and Mr. Sandeep Agarwal (Fixed Income) and Mr. Arjun Nagarajan (Gold ETFs).
The NFO opens for subscription on January 05, 2024 and closes on January 19, 2024. The schemes will reopen for continuous sale and repurchase on February 01, 2024
The minimum subscription amount is Rs 100/- and in multiples of Re.1/- thereof.
The scheme offers Regular Plan and Direct Plan each plan offers Growth option and Income Distribution cum capital withdrawal Option (IDCW).
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