The financial markets in India have seen a lot of volatility in recent years. Apart from the pandemic, Russia’s invasion of Ukraine, steep rise in crude oil prices, weakening of the Indian rupee and the second wave of COVID-19 can be seen as some of the contributors to this market turmoil. Many financial experts are of the opinion that this intense market volatility, especially in equity markets, may continue for a considerable period of time. With uncertainty hovering over the horizon, investors may find it prudent to spread their investments across multiple asset classes. This is where it makes sense to choose a multi-asset investment due to the volatility of the market.

Investors can take note of the immortal words of Benjamin Grantham, which were –
‘There is a close logical connection between the concept of safety margin and the principle of diversification’, This statement can find its modern interpretation in asset allocation done through multiple asset allocation schemes. Opting for this type of plan can help investors get the required exposure across multiple asset classes like equity, debt, gold etc. Therefore, if any one asset class faces a declining trend, there are other asset classes that can help the investor with capital conservation and more or less stable returns over time.

Apart from the balancing act of these mutual fund schemes, here are two other reasons why multi-asset investing through multi-asset mutual fund schemes makes sense in a volatile market –

Fund Management Expertise

Market volatility can lead to panic selling/buying due to the rapidly spreading worry sentiments in the markets. At a time when there is a high probability that a hypothetical loss could turn into a real loss, most investors may not be equipped with the information to enter or exit the market. A multi-asset allocation fund can offer investors the expertise of fund managers and their team. These professionals may be able to research and select suitable securities to rebalance an individual’s portfolio to suit their risk appetite and goals.

Exposure to different asset classes

Choosing a multi-asset allocation fund allows investors to invest in asset classes including equity, debt, gold, etc. This exposure may be relevant to the financial goals of investors who wish to continue investing for the long term. As a thumb rule, multi-asset mutual fund schemes are required by SEBI (Securities and Exchange Board of India) to invest in at least three asset classes with a minimum allocation of at least 10% across all three asset classes. is required. This diversification can help investors diversify their portfolios when they choose multi-asset allocation investments.

It is important for investors to assess their financial goals, risk appetite and investment horizon before making investment decisions.

Disclaimer

An investor education initiative.

meeting www.icicipruamc.com/note To know more about the process of fulfilling the Know Your Customer (KYC) requirement for investing in mutual funds. Investors should deal only with registered mutual funds, details of which can be verified on SEBI website http://www.sebi.gov.in/intermediaries.html, For any queries, grievances and grievance redressal, investors may contact the AMC and/or Investor Relations Officers. In addition, investors can also file complaints on https://scores.gov.in If they are dissatisfied with the proposals made by the AMC. The SCORES portal allows you to register your complaint with SEBI online and view its status later.

Mutual fund investments are subject to market risks, read all the documents related to the scheme carefully.