Day 94 : Multi-Asset Funds
A multi-asset fund is a type of mutual fund that invests in 3 or more asset classes to help diversify your portfolio. They allocate at least 10% to each of the classes.
But are MAFs a one-stop solution for your diversification problems?
Each MAF has a different allocation. They can choose to invest in these asset classes: equity, debt, commodities, real estate and international equity.
Since they have a different allocation to various assets, most funds will not fit your needs. Many will be either above or below your risk profile.
This depends on the fund manager. They might be bullish on equity and have a heavy equity allocation.
On the other hand, another fund might be bullish on land prices and allocate a large percentage to real estate.
The movements and returns of these two funds will be very different from each other. It could be possible that neither of them satisfies your diversification needs.
Hence, the belief that they are a one-stop solution for every conservative investor is not true.
In some cases, it might be better to create your own customised multi-asset portfolio. Invest in a combination of various assets or funds that is comfortable for you.
Doing this will give you more flexibility, more control, and you will be better able to balance your risk level.
Cheers!
94/100
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