In the last few months, investors invested heavily in silver with the expectation of triple digit returns and further growth. But, in recent times, a huge fall of 25 percent in silver prices in a single day has spread panic among investors. Investors who were wary of silver opted for gold, whose prices have also seen a huge decline in the last few trading sessions.
The option of multi asset allocation funds
Amidst the sharp fall in gold and silver prices, investors opted for multi asset allocation funds. Analysts say investors should opt for mutual funds that offer a mix of investments in commodities and equities. This adds diversity and balance to the portfolio and reduces risk. Like multi asset allocation mutual funds. Multi asset allocation funds invest in at least three different asset classes equity, debt and commodities. This also includes gold and silver, which have shown huge fluctuations in recent times.
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SEBI’s instructions are also mandatory
- As per SEBI guidelines, it is mandatory for multi asset allocation funds to invest at least 10 percent in three asset classes. Fund managers have the freedom to decide the investment mix at any time based on the performance of the asset class.
- Multi asset allocation funds offered investors an opportunity for diversification at a time when equity markets were volatile and returns in debt instruments were relatively low. Multi asset allocation funds have also outperformed hybrid funds.
- Multi asset allocation funds have given excellent returns over the last few years. Among these, Nippon India Multi Asset Allocation Fund is at the forefront. The fund has given returns of 23.97 per cent, 20.47 per cent and 22.62 per cent in one, two and three years respectively.
- In fact, the top-10 multi asset allocation funds have grown at an average CAGR of 20.26 per cent over the last one year and 21.01 per cent over three years. In comparison, the returns of the top-10 equity funds have been only 16.62 per cent in one year.
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