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Tata Capital > Blog > 5 Benefits of Multi-Asset Funds

5 Benefits of Multi-Asset Funds

5 Benefits of Multi-Asset Funds

Whether you’re a do-it-yourself investor or rely on expert services to manage your financial portfolio, you must understand the various mutual funds at your disposal. This way, you know how to truly diversify your portfolio; in debt and equity funds plus hybrid mutual funds, such as multi-asset funds.

Now debt and equity funds let you invest a minimum of 60% corpus in only debt or equity asset classes such as corporate bonds, debentures, company shares, and stocks. At the same time, hybrid funds like multi-asset mutual funds provide you exposure to multiple asset classes (minimum 3) in varying ratios. These classes can include the ones that form debt and equity funds and also others like real estate, gold, etc.

If you're wondering is it worth stepping out of your comfort zone, and introducing multi-asset funds to your financial portfolio, here's why you shouldn't wait any longer.

1. Easy entry and exit

Typically, multi-asset funds are open-ended, and an investor can enter for free at any time. Exiting the scheme is also easy and free if the investor redeems at least 10% of their investment within 1 year of entering.

The remainder of the investment must also be redeemed at any time within 1 year, failing which the fund will charge a penalty of 1%. As long as these simple conditions are met, you’re free to enter and exit any multi-asset fund scheme without any charge.

2. Portfolio diversification

Diversifying or hedging your financial portfolio boosts your chances to earn higher returns. And, the only way to diversify your financial portfolio is by investing your corpus in various asset classes.

So, invest funds in not only debt and equity-linked funds but also multi-asset funds. Doing this exposes you to ample asset classes and offers a chance to earn steady rewards through market fluctuations.

Additional Read: Multi Cap Funds vs Flexi Cap Funds: How Are They Different?

3. Professional curation

Many of us are home-grown investors, meaning we learn and invest based on our knowledge. Sometimes that works well, but many a time, our investment strategy can go awry. However, when you invest in multi-asset mutual funds, you are already availing an expert's services who concocted a multi-asset fund portfolio for you.

Here, you don't have to choose how many equity instruments or debt instruments you should buy to balance your investment portfolio. Proper distribution of the best multiple-asset classes is automatically offered to you through this fund.

4. Short and long-term returns 

By investing in a diverse range of asset classes, you can generate returns in most types of market environments and across investment horizons. Since you're invested in both equity and debt, you can make money in both the short-term through debt and the long-term through equity.

5. Risk mitigation

Investing in a single asset class such as equity or debt is like putting all your eggs in one basket. When you do this, you surrender yourself entirely to market volatilities. The only way to mitigate or reduce your risk exposure while earning substantial returns is by investing in varied instruments within the mutual fund economy. Multi-asset allocation funds provide one such opportunity.

Additional Read: Important Tips to Pick Top-Trending Mutual Funds

Parting thoughts

Want to include multi-asset funds in your financial portfolio? Do it online with the help of Tata Capital Moneyfy app Log on to our user-friendly portal or app to compare different types of mutual funds, including multi-asset funds, and apply instantly!

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