A total of 25 multi-asset allocation funds have outperformed most general equity schemes over one-, three-, and five-year periods, according to a recent report released by Ventura Securities on November 4, 2024.
Due to their diversified investment strategies, which helps them get returns across various asset classes, multi-asset allocation funds offer benefits that single-asset equity funds often lack, the report said.
Juzer Gabajiwala, director, Ventura Securities said: “The varied performance emphasises the importance of selecting funds aligned with individual investor objectives and risk tolerance, reinforcing the notion that “one size does not fit all” in multi-asset allocation.”
Performance Of Multi-Asset Allocation Funds
The analysis of 25 multi-asset allocation funds revealed that they rely heavily on equity and debt, along with a mix of gold and silver, arbitrage and other alternative assets.
Interestingly, some multi-asset funds have outperformed large-cap funds also by achieving higher returns with lower risks.
Quant AMC Multi Asset Fund surpassed around 79 per cent of equity schemes over three years, and 86 per cent of equity schemes over five years, despite maintaining equity exposure below 51 per cent. Similarly, the ICICI Prudential Multi Asset fund outperformed 63 per cent of equity schemes in three years and nearly 50 per cent over five years.
For first-time investors focusing on retirement or education goals, multi-asset funds are ideal, Ventura securities said. “For instance, an investment of Rs 62 lakh at age 55, with an estimated return of 10 per cent per annum, could grow to Rs 1 crore in five years,” the report said.
Risk Vs Rewards
The study also categorised funds based on risk exposure. Conservative funds from Edelweiss and WhiteOak fund houses have less than 35 per cent equity exposure. Conversely, aggressive funds, such as Bajaj Finserv Shriram, Motilal Oswal and HSBC maintain over 65 per cent equity exposure.
“WhiteOak delivers solid returns with minimal risk, showcasing a risk-reward ratio of 16.6 compared to the large cap’s 2.8. Its diversified asset mix – spanning gold, equity, debt, REITs, and INVITs- effectively spread risk. Quant has a slightly lower risk-reward ratio of 16.4, closely matching WhiteOak. However, it carries higher risk due to its greater equity allocation, though it maintains a diversified portfolio,” the report further said.
