Motilal Oswal Multi Asset Fund NFO – How good is this MF strategy?
Motilal Oswal Multi Asset Fund NFO – How good is this MF strategy?
Motilal Oswal mutual funds has launched Multi Asset Fund that opens for subscription on 15 July, 2020. Multi asset mutual funds would invest in investment classes like equity, debt and gold. There is mixed reaction about such mutual funds category. Some experts say good for diversification, while others say just avoid them. Gold Prices are going up. While equity markets were volatile till a few weeks back, now SENSEX is going up and up. Is investing in multi asset funds is a good strategy now? Should you invest in Motilal Oswal Multi Asset Fund? What are the various risk factors associated with such funds?
Issue details of Motilal Oswal Multi Asset Fund (NFO) – MOFMAF
This is an open-ended equity fund.
This scheme would open for subscription on 15 July, 2020.
This scheme would close for subscription on 24 July, 2020.
Since this is an open ended scheme, it would again open for subscription after 5 working days from the date of closure of the initial NFO period.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 500 and in multiples of Rs 1 there-off for lump sum investments.
Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 12 months.
The NAV of the fund is Rs 10 per unit during the NFO initial subscription.
There is no entry load to invest in this fund.
There is an exit load of 1% if redeemed within 3 months from the date of allotment of units.
This scheme is classified as MODERATELY HIGH RISK scheme.
Scheme total expense ratio (TER) is estimated at a maximum of 2%.
What is the investment objective of this MF scheme?
The investment objective is to generate long term capital appreciation by investing in a diversified portfolio comprises of Equity, International Equity Index Funds/ Equity ETFs, Debt and Money Market Instruments and Gold Exchange Traded Funds.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
Who is eligible to invest in this mutual fund scheme?
The following can invest in this scheme.
1) Indian resident adult individuals, either singly or jointly.
2) Minors through Parents/Lawful Guardian.
3) Hindu Undivided Family (HUF) through its Karta.
4) Partnership Firms in the name of any one of the partners.
5) Proprietorship in the name of the sole proprietor.
6) Non-Resident Indians (NRIs) / Persons of Indian Origin (PIO) on full repatriation basis or on non-repatriation basis;
Complete list of eligible participants who can invest can be checked in prospectus of this new fund offer.
Who is the Fund Manager of Motilal Oswal Multi Asset Fund?
Here are the fund managers of this scheme.
1) Mr. Siddharth Bothra – Fund Manager – Equity
2) Mr. Abhiroop Mukherjee – Fund Manager – Debt Component
3) Mr. Herin Visaria – Fund Manager – International Equity
4) Mr. Swapnil Mayekar – Fund Manager – Gold
What is the benchmark for this scheme?
The benchmark for this scheme is 30% Nifty 50 TRI + 50 % Crisil Short Term Gilt Index + 10% Domestic Price of Gold + 10% S&P 500 Index (TRI).
What is the allocation pattern in this mutual fund?
This fund investment pattern is as follows:
1) It would invest 10% to 50% in equity, equity related instruments and international equity index funds/ equity ETFs. The risk profile in this segment is high.
2) It would invest 40% to 80% in debt, money market instruments. The risk profile in this segment is medium.
3) It would invest 10% to 20% in the gold Exchange Traded Funds. The risk profile in this segment is medium.
Why to invest in the Motilal Oswal Multi Asset Fund?
Here are a few reasons to invest in such mutual fund schemes.
1) This fund would not restrict to invest in just equity, but it would invest in all 3 assets classes i.e. equity, debt and gold. If you are one among such investor who want to invest in all these 3 asset classes, you can invest in such funds.
2) This fund would invest in pre-defined limit in all these 3 asset classes. One would not miss out any gains that is arising from any of the asset classes.
Some key risk factors you should consider before you invest in such funds
One should consider some of these risk factors / negative factors before investing.
1) If an investor wants to invest separately in such asset classes, they can pick-up right equity mutual funds or debt mutual funds or gold investment options. In this case, the investor has to depend on just one fund and cannot pick-up any quality funds from various asset classes.
2) These funds are taxed as debt funds if their equity allocations do not meet the 65% limit, with STCG being taxed at the investor tax slab rate and LTCG being taxed at 20% with benefits of indexation.
3) Since it invests in debt funds, these would have interest rate risks (interest rate increases, bond yield fall and vice versa).
4) It would invest in international equity and debt where there is country risk, i.e. would have an impact due to foreign country rules and regulations.
5) It would invest in international equity or debt and would have an impact due to forex fluctuations.
6) It would invest in unlisted securities where there could be a liquidity issue.
7) You can refer complete risk factors of investing in this particular scheme in SID / KIM / NFO prospectus.
Performance of existing Multi Asset Funds in India
Now, let us look at some of the best performing Multi Asset Funds in India. These top 10 multi asset funds gave 4% to 7.6% annualized returns in the last 5 years.
Motilal Oswal Multi Asset Fund NFO – How good is this strategy?
Motilal Oswal Multi Asset Fund invests in multi asset class, i.e. equity, debt and gold. While I am not against such multi asset funds, such funds would provide minimum scope for investors to play with equity or debt or gold individually. Instead, they can pick individual mutual funds from such asset classes and if they are not happy, they can always exit and invest in better quality funds from such asset classes. If you still want to proceed with multi asset funds, you can pick-up some of the top performing multi asset funds indicated above instead of testing with new funds where the performance is yet to be proved.
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Motilal Oswal Multi Asset Fund NFO Review
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