Shriram Asset Management Company (AMC) will launch Shriram Multi-Asset Allocation Fund today, August 18, 2023, targeting long-term inflation-adjusted returns through exposures to equity, debt, and gold and silver exchange-traded funds (ETFs). The fund’s corpus will comprise 65-80 per cent in equities.
Highlighting the investment strategy on Thursday, Shriram AMC said in a press release that the scheme would include 30 to 40 stocks from its proprietary Enhanced Quantamental Investment (EQI) model that uses statistical data to make better investment decisions and achieve superior performance.
The new fund offer (NFO) will close on September 1, 2023. According to the AMC, the fund is tax-efficient and aims to generate inflation-adjusted returns.
How You Can Invest
Investors can invest in the fund through the Systematic Investment Plan (SIP), top-ups or Systematic Transfer Plan (STP) from liquid or overnight funds to meet their financial goals.
The minimum amount for lumpsum investment is Rs. 5,000; through SIPs, it is Rs. 1,000 per month or Rs. 3,000 per quarter. In addition, the scheme has no lock-in period.
Commenting on the new fund, Kartik L. Jain, MD & CEO of Shriram AMC, says a five-year analysis of multi-asset allocation funds revealed that they encountered lesser volatility with equity-like returns.
Shriram Multi-Asset Allocation Fund, he says, “is a good option for goal-planning. The exposure to gold also gives us a hedge against market volatility, especially during crisis periods, reducing the drawdown (fall from the peak) and giving a quicker recovery back to the earlier level.”
The Fund’s Key Features
The fund will allocate a minimum of 65 per cent in equities and 10-25 per cent of funds in high-quality (AAA) short- to medium-term debt, primarily in government and government-backed securities to avoid credit risk. It will also invest 10-25 per cent in gold and silver ETFs, with the option to invest up to 10 per cent in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). Investors can also benefit from the Long-Term Capital Gains (LTCG) tax of 10 per cent by investing in the fund.
The fund offers investors the benefit of LTCG at 10 per cent plus surcharge and cess if capital gains cross Rs 1 lakh in a fiscal year. Highlight the point, the press release says, “If an investor buys or sells equity, debt, gold separately to rebalance their asset allocation, they might face capital gains tax with each transaction. There is no capital gains tax when the fund manager transacts within the scheme. These two aspects make this fund a tax-efficient investment option for investors.”
Deepak Ramaraju and Gargi Bhattacharyya Banerjee are fund managers.
The fund employs a two-tier approach for superior risk-adjusted returns. Jain explains in detail, “Its ‘risk parity’ approach between equity/debt/gold aims to minimise volatility and maximise returns. For equity allocation, our proprietary EQI model uses an integrated combination of quant and fundamental analysis to create a risk-adjusted equity portfolio to deliver consistent alpha.” Further, he says low volatility (steady returns), momentum (increasing returns), and low valuation (the right price) are factors, which “has shown positive results in both back and forward testing”.
