Around a decade and a half ago, while dining with the overseas representative of a foreign collaborator of a leading Indian mutual fund house, I was intrigued by his expression of curiosity as to why the appetite for hybrid funds in India was somewhat muted, unlike in the Western world.
On returning to my office and checking the data for 7 and 10 years, I found that not only had some hybrid funds done nearly as well as many equity fund categories but also protected capital well on the downside. It was a lesson well learnt and that too from a casual conversation over a meal. I have used it as a bedrock for my portfolio, ever since and am none the worse for doing that.
The latest kid on the block, so to speak, from this category is multi-asset mutual funds (MAFs), which are increasingly becoming a preferred investment option for investors seeking diversification, stability, and long-term wealth creation.As the name suggests, these funds invest across multiple asset classes—primarily equity, debt, and commodities (like gold and silver). As per SEBI regulations, a multi-Aasset fund must invest at least 10% in a minimum of three different asset classes, which ensures true diversification.
One of the biggest advantages of multi asset funds is their ability to balance risk and return. Equity as an asset class offers growth potential but comes inbuilt with volatility. Debt instruments provide stability and regular income while commodities like gold often act as a hedge during economic uncertainty or inflationary periods. By combining these asset classes in a single portfolio, MAFs aim to reduce overall portfolio volatility while still participating inthe market upside.
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