Make the best of 2023 with Multi-Asset Fund

With the world's economies facing prolonged uncertainties amid a high inflationary scenario, economic slowdown and steep interest rate hikes; it is time to take prudent investment decisions. Amid the extreme volatility with downward bias seen in the equity markets, a balanced investment approach with investments across multiple assets could be an effective solution.

Having exposure to diversified assets with asset allocation strategy is the need of the hour. If one wants to end the year 2023 with stability while protecting the capital, opting for a multi-asset offering seems to be the way ahead. A multi-asset fund is a hybrid mutual fund which has the mandate to invest in three or more assets with a minimum allocation of 10% in each at any given point of time.

Through a multi-asset fund, you can enjoy varied benefits including wealth creation through the equity component, portfolio stability  with debt and a hedge against inflation and global risks through gold investment. Though Indian equities have continued to show resilience at a time when developed markets were under tremendous pressure, one can't ignore the volatility seen in the Indian equity market last year.

With expectations that debt will show stability while equity may consolidate and gold estimated to deliver good returns, an investment in a multi-asset offering can help navigate the uncertainties 2023 may present. Apart from the three asset classes mentioned, such a fund also has the flexibility to invest in REITs, InvITs and also profit from the covered call strategy, an Option (Derivative) transaction in which the party selling or writing the Call Option has an equal amount of underlying assets. Not all the fund houses use this strategy as a part of this category fund. But the highlight is that this strategy aids in generating returns even in a range-bound market, thereby improving the overall yield of the portfolio.

Within the multi-asset fund category, ICICI Prudential Multi-Asset Fund is one of the consistent performers. Investors can consider this category offering as a part of their core portfolio for meeting their long term financial goals.