Bajaj Finserv Mutual Fund is now launching a multi-asset fund NFO. This mutual fund invests in investment classes such as stocks, bonds, gold, silver, REITs, and InvITs. It also comes with a dividend yield strategy. Some experts say such funds are good for diversification, while others say they should just be avoided.Should you invest? Bajaj Finserv Multi Asset Allocation Fund NFO• What are the various risk factors associated with such funds?
Bajaj Finserv Multi Asset Allocation Fund NFO – Issue Details
| Fund name | Bajaj Finserv Multi Asset Allocation Fund |
| NFO is open | May 13, 24 |
| NFO closing | May 27, 24 |
| Scheme resumed for continued purchase/sale | Within 5 business days |
| Minimum application amount | 500 rupees, thereafter in multiples of 1 rupee |
| Minimum SIP | 500 rupees for 6 months |
| Fund NAV | 10 rupees during NFO period. |
| entry road | Nothing |
| End of loading | Units exceeding 30% of the investment amount will be subject to a 1% redemption fee within one year |
| danger | very high risk |
| standard | NIFTY 50 TRI (65), NIFTY Short Duration Index (25), Domestic Gold Price (10) |
| fund manager | Nimesh Chandan Solvu Gupta Siddharth Choudhary Vinay Bafna |
Bajaj Finserv Multi Asset Allocation Fund SID
What is the investment objective of this MF scheme?
Open-ended schemes that invest in stocks and equity-related products, debt and debt derivatives and money market products, gold ETFs, silver ETFs, exchange-traded commodity derivatives (ETCDs), and units of REITs and InvITs.
There is no guarantee that the scheme’s investment objectives will be realized.
What is the allocation pattern of this mutual fund?
The investment pattern of this fund is as follows.
| Type of instrument | minimum% | maximum% | risk profile |
|---|---|---|---|
| Stocks and stock-related products | 35% | 85% | very expensive |
| Debt securities (including bond securitization) and fixed income derivatives) and money markets. Financial instruments containing debt units* Directed investment trust scheme |
Ten% | 55% | low to moderate |
| Gold ETF, Silver ETF, Exchange Trading Commodity derivatives (ETCD) and others Other ways to invest in commodities As permitted by SEBI from time to time. |
Ten% | 55% | moderately high |
| REIT and InvIT units | 0% | Ten% | expensive |
How have such asset classes performed individually?
Below is the performance of stocks, debt, and gold over the past 10 years against a model portfolio to understand the performance of these asset classes.
Why invest in Bajaj Finserv Multi Asset Allocation Fund NFO?
Investing in a fund like Bajaj Finserv Multi Asset Allocation Fund offers several benefits to investors.
- Diversification: The fund invests in various asset classes such as equities, debt, commodities (gold and silver), and REITs/InvITs. Diversification helps spread risk across different investment vehicles and can potentially reduce the impact of volatility in a single asset class.
- Adaptability: The fund can invest in multiple asset classes, allowing it to adapt to changing market conditions. Different asset classes perform differently in different economic scenarios and this fund aims to take advantage of those fluctuations.
- Historic performance: The historical performance data of the underlying asset classes of the provided funds shows that different asset classes have performed well in different years. By investing in multiple asset classes, the Fund aims to capture the growth potential of each asset class while mitigating the risk associated with the underperformance of any individual asset class.
- crisis management: The Fund’s asset allocation strategy and diversification help manage risk. For example, stock investments offer the potential for growth, while bond investments offer stability. Similarly, investing in gold and silver acts as a hedge against market volatility.
- Income generation: For investors looking for income generation, this fund invests in bonds and has a dividend paying strategy. Dividend-paying companies can provide stable income, making them attractive to investors looking for regular cash flow.
Bajaj Finserv Multi Asset Allocation Fund Risk Factors NFO
Investing in Bajaj Finserv Multi Asset Allocation Fund involves certain risks that investors should consider.
- Market risk: Fluctuations in financial markets can affect the value of investments across asset classes, including stocks, debt, commodities, and REITs/InvITs.
- Asset class risks: Each asset class, such as stocks, debt, and commodities, carries its own risks. For example, stock investments are affected by market fluctuations, while bond investments can be affected by changes in interest rates.
- Interest rate risk: Changes in interest rates may affect the value of fixed income investments held by the Fund. Bond prices typically fluctuate inversely to interest rates.
- Credit risk: Debt investments are subject to credit risk. Credit risk is the risk of default by issuers of bonds and other debt securities held by the Fund.
- Liquidity risk: Certain investments, particularly REITs/InvITs and commodity investments, have limited liquidity, which may make it difficult to buy or sell at a desired price.
- Product price risk: Investing in commodities such as gold and silver is subject to price fluctuations that are influenced by factors such as supply and demand relationships, geopolitical events, and economic indicators.
- Complete risk factors for investing in this particular scheme can be found in the SID/KIM/NFO prospectus.
Bajaj Finserv Multi Asset Allocation Fund NFO – Should I invest?
Bajaj Finserv Multi Asset Allocation Fund invests in multiple asset classes such as stocks, bonds, gold and silver. REITs and InvITs. Although this combination underperformed in the short term, it produced moderate to high returns in the medium to long term. Such funds are good for portfolio diversification.
On the other hand, such funds have limited control over different asset classes. Do not invest in such funds if you are not a long-term investor as they will underperform in the short to medium term.
High-risk investors who understand the advantages and disadvantages and invest in such multi-asset mutual funds.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be contacted at suresh@myinvestmentideas.com.
