/Are multi-asset funds a good way to take exposure to gold and global equities?

Are multi-asset funds a good way to take exposure to gold and global equities?

Mumbai: Retail Investors could give the new fund offer (NFO) of Nippon India Multi Asset Fund a miss. Financial planners said high allocation to equity and debt taxation make this product unsuitable for most investors.

The fund, which closes on August 21, will have 50 per cent allocation to domestic equities, 20 per cent to international equities, 15 per cent to commodities and 15 per cent to fixed income, with rebalancing happening once every quarter.

Financial planners said fund houses are packaging products to take advantage of the ongoing appetite for gold and international equities. Motilal Oswal Asset Management, too, launched a multi-asset fund offering last month.

“Multi-asset funds are yet to perform in the Indian scenario. Having a simple asset allocation which they can manage on their own gives greater flexibility to individual investors,” says Vidya Bala, founder, PrimeInvestor.

Since the fund will hold less than 65 per cent in Indian equities, gains will end up getting taxed like that in a debt scheme. For those in the highest tax bracket, the taxes on gains will be over 30 per cent if redeemed before three years. In case of equity mutual funds, the capital gains tax is 10 per cent if they are sold after one year.

Financial planners said past performances of existing equity schemes from Nippon India Mutual Fund have been modest. Nippon Large Cap Fund and Nippon Multi Cap Fund have underperformed their benchmark indices over three- and five-year periods.

Investors looking for a safer product could look at plain vanilla debt products, said advisors. “The risk is high because of the minimum 70 per cent allocation to equities. Multi-asset funds are used by investors with low to moderate risk appetite,” says Harshad Chetanwala, CFP, MyWealthGrowth.

Let’s block ads! (Why?)

Invest-Wealth-Economic Times