Nippon India Multi Asset Fund (Equity + Debt + Gold) – Should you invest?

Nippon-India-Multi-Asset-Fund-NFO-ReviewNippon India Multi Asset Fund (Equity + Debt + Gold) NFO Review

Owing to rise in gold prices, mutual fund houses are lined up with Multi Asset Funds. Nippon India is planning to launch Multi Asset Fund that opens for subscription on August 7, 2020.  Motilal Oswal has launched Multi Asset fund 2.5 weeks back. Multi asset mutual funds would invest in investment classes like equity, debt and gold. Some experts say good for diversification, while others say just avoid them. While equity markets were volatile till a few weeks back, now SENSEX is going up and up. Should you invest in Nippon India Multi Asset Fund New Fund Offer? What are the various risk factors associated with such funds?

Also Read: 5 Top Banking and PSU Debt Funds which are best bet now 

Issue details of Nippon India Multi Asset Fund (NFO)

This is an open-ended equity fund.

This scheme would open for subscription on August 7, 2020.

This scheme would close for subscription on August 21, 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 5,000 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 12 months from the date of allotment of units. Earlier Motilal Oswal multi asset fund NFO issue the exit load was applicable only if redeemed within 3 months.

This scheme is classified as MODERATELY HIGH RISK scheme.

Scheme total expense ratio (TER) is estimated at a maximum of 2%.

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Download Nippon India Multi Asset Fund KID

What is the investment objective of this MF scheme?

The primary investment objective of Nippon India Multi Asset Fund is to seek long term capital growth by investing in equity and equity related securities, debt & money market instruments and Exchange Traded Commodity Derivatives and Gold ETF as permitted by SEBI from time to time.

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 a 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 Nippon India Multi Asset Fund?

Here are the fund managers of this scheme.

Manish Gunwani; Ashutosh Bhargava; Amit Tripathi; Vikram Dhawan, Kinjal Desai.

Vikram Dhawan will be the dedicated fund manager for managing commodity investments of the schemes of the Nippon India Mutual Fund.

Kinjal Desai will be the Dedicated Fund Manager for Overseas Investments

What is the benchmark for this scheme?

The benchmark for this scheme is 50% of S&P BSE 500, 20% of Crisil Short Term Bond Fund Index & 30% of Thomson Reuters – MCX iCOMDEX Composite Index.

What is the allocation pattern in this mutual fund?

This fund investment pattern is as follows:

1) It would invest 50% to 80% in equity & equity related securities (including overseas securities/ Overseas ETF). The risk profile in this segment is medium to high.

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2) It would invest 10% to 20% in debt and money market instruments. The risk profile in this segment is low to medium.

3) It would invest 10% to 30% in the commodities, including gold Exchange Traded Funds. The risk profile in this segment is medium to high.

How such asset class has performed individually?

Here is how the performance of equity, debt and gold in the last 10 years against model portfolio for understanding how such asset class performed.

Nippon India Multi Asset Fund NFO - Model portfolio vs individual asset class movement

Why to invest in the Nippon India Multi Asset Fund?

Here are a few reasons to invest in such mutual fund schemes.

1) This fund would invest in all 3 assets classes, i.e. equity, debt and gold. Asset classes would follow different cycles over different periods, hence investing in such a combination would help to get optimal returns.

2) It is difficult to predict whether gold would outperform or equity would outperform in the long run. If you are one among such investor who is in a dilemma, you can invest in such funds.

3) Investing in funds that invest in various asset classes would help for portfolio diversification.

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.

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5) It would invest in international equity or debt and would have an impact due to forex fluctuations.

6) 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.

Nippon India Multi Asset Fund NFO - Multi Asset Funds Performance

Also Read: Top Performing international mutual funds

Nippon India Multi Asset Fund NFO – Should you invest?

Nippon India Multi Asset Fund invests in multi asset class, i.e. equity, debt and gold. As indicated earlier, 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, one 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 such investment strategy, 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 prove.

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Suresh KP

5 comments

  • tanishq

    Very nice ananlysis

  • Manu Jaidka

    Very nice analysis and thanks to other members who wrote their experience in comments section. Shall try to stay away from such funds.

  • dcagrawal

    as Nippon India AMC is worst performing amc,their management is very poor since 2018.
    their existing scheme like tax saver fund is negative return in 5-10 years period.
    equity hybrid and multi asset fund is very very poor performance against peer.
    whats happen to this amc after Jan’2018,its a research subject.
    as per me ,every investor to stay away from this amc,except etf.
    Pl.write on this issue?

  • ravee

    I totally agree with Rajolu Ramam since I am also one more example of that experience.
    Due to resignation of service, in order to get dividend, I also invested with Rel. Large Cap Montly Div. Scheme & Rel Eq Hyb Fd Monthly Div Scheme nearly 14 lacs both schemes. But as he said I was also not get Monthly Dividend nearly more than a year and the value of the investment also now reduced to 8 lacs. HEAVY LOSS OF 6 LACS.STILL I AM NOT WITHDRAWN FROM THE SCHEME hope to get the investment amount waiting for appreciation to avoid the 6 lacs LOSS. Hence, be careful in investing MF particularly Seniors & those needed monthly amount and don’t put LARGE AMT. This is just for educating others since I got an experience particularly with Rel. MF. (As an average people we suffer but REL. OWNERS STILL BE A BIG SHOT with our hard earned money). Thqs.

  • RAJOLU RAMAM

    When it was reliance I invested in nearly 6 MFs, 4 I sold out with heavy losses. Now 2 MFs remined with me as I cannot sell them due to locking period. Now, Nippon has taken over, I expected some improvement in the values. A 3 years fund now, Iam down by 1 lakh after 2 years and no dividend for the last 2 years. This 1 lakh loss also due to the recent spurt if sensex. MFs are not for middle class, lower middle class, senior citizens and retired people. These companies show heavens at the time of initial offers. Once the offer date is over, they leave the investors to their fate. IS THERE ANY SUPERVISION/INSPECTION BY SEBI/GOI-MF, RBI OR ANY AGENCY THEIR ACTIVITIES, HOW THEY ARE INVESTING. THESE MFs invested in IL&FS, DHFL, YES BANK ETC ETC THROUGH INFLUENCE. ONE SHOULD BE CAREFUL WHEN WE ARE INVESTING OUR HARD END MONEY.

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