Is Multi Asset investing the right move?
What is multi-asset investing
As the name suggests, multi-asset investing is a strategy that involves optimal diversification by allocating your corpus to a variety of assets. These include stocks, bonds, real estate and even gold and cash. Investment is usually based on market outlook and volatility. The idea behind multi asset investments is to minimize your risk, by dividing your corpus across various asset categories, while also enabling you to gain maximum returns and participate in the growth of each asset category. For instance, if you were following a multi asset strategy on the day of the budget, then the loss you made in equities would have been offset by the gains you would have made in the bond market that day, where yield trended lower due to a strong buying sentiment.
Benefits of Multi Asset Investing
While you already know that multi asset investing allows you to limit the downside, here are some more benefits of investing in it :
Optimal Diversification
Since the multi asset investing strategy prompts you to divide your corpus across major asset classes, your portfolio becomes diversified and as you know, diversification is the first rule of investment. A diversifies portfolio allows you to overcome the high levels of risk associated with the asset classes like equity, while it also helps you to earn better returns than more stable assets like debt.
Flexibility
Often people, while considering an investment strategy, have a goal at the back of their minds, which could be purchasing a new vehicle or a new home or gaining an ability to enjoy an early retirement. Since multi asset investing involves all major asset categories, your investment has the flexibility that is required to attain these goals. When the market is stable, you obtain high returns from equities and when it is volatile you can minimize your losses, taking refuge in safer options like debt and gold components.
Active Management
Multi Asset funds allow you to fulfill your diversification objectives through a single avenue; they are actively managed by experienced fund managers who study the market and take portfolio decisions primed for optimal returns. The active management of such funds ensures that you never face unnecessary risk. Whenever the situation demands, the fund managers are prepared to shift your corpus from a risky asset to a safer one, and vice versa, thus offering you the full benefit of market fluctuations, while also protecting you from the negative side of it.
Should you opt for multi asset investing ?
Now that you know all about multi asset investing strategy and its various benefits, all that remains to be seen is whether this is the right fit for you or not. As an investor your decisions should be based on your personal profile which includes risk appetite, return requirements, investment horizon and financial goals.
Multi Asset investing is a great choice if your risk appetite isn't extremely high and you find yourself dissuaded by the markets volatility. Further, if you are not keen to maintain a diversified portfolio, or you dislike tracking the market and taking regular investment decisions, then a multi asset fund will enable you to access professional fund management services while also enjoying the benefits of a well diversified portfolio
So, in the current market environment, if you are faced with this confusion, then picking a multi asset fund for investing could become your best financial decision of 2023.