Motilal Oswal Launches Asset Allocation Passive Fund of Fund – Review
Motilal Oswal Asset Allocation Passive Fund of Fund NFO would open for subscription on 19th February, 2021. This fund of fund would invest in equity, debt and gold ETFs of specified mutual funds. This is similar to multi asset mutual fund, but invests in other funds, but without any cap in any particular asset. Motilal Oswal MF comes with two plans viz aggressive plan and conservative plan. In this article, we would provide Motilal Oswal Asset Allocation Passive Fund of Fund NFO details (aggressive plan) and indicate whether one should invest in such fund of funds.
Motilal Oswal Asset Allocation Passive Fund of Fund NFO Details
This is an open-ended MF of aggressive plan. Here are the NFO issue details.
|Motilal Oswal Asset Allocation Passive Fund of Fund NFO Details|
|Scheme reopens for continous purchase/sale||Within 5 days from closure|
|Minimum Lumpsum||Rs 500|
|Minimum SIP||Rs 500 per month for 12 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||> 3 months – 1%|
|Risk||Aggressive Plan – Very High Risk|
|Max expense Ratio (TER)||2.25%|
|Benchmark||60% Nifty 500 TRI + 20% S&P 500 TRI (INR) + 5% Domestic Price of Gold + 15% Nifty 5 Yr Benchmark G-Sec Index|
Who can invest in this mutual fund scheme?
Any of the following can invest in this scheme.
1) Resident Individuals
2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,
4) Foreign Portfolio Investors
What is the investment objective of this fund?
To generate long term growth/capital appreciation by offering asset allocation investment solution that predominantly invests in passive funds such as ETF/Index Funds of equity and equity related instruments (domestic as well as international), fixed income and Gold.
However, there is no assurance or guarantee that the investment objective of the Scheme will be realized.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Units of specified schemes of Mutual Fund||95%||100%||Medium to High|
|Units of Liquid schemes / Money Market Instruments||0%||5%||Low to medium|
Why should you invest in such Fund of Funds?
Here are a few reasons to invest in such schemes.
1) This fund of fund would invest in all 3 asset classes up to 90% in equity or up to 40% in debt and up to 20% in gold. Good for diversification.
2) This fund invests up to 30% in international equity. Good for investors who are looking for some international exposure.
3) While the debt segment can provide fixed income, equity portion can provide growth in the fund. Gold can be used for asset diversification.
Some risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) Though this scheme looks like multi asset fund, but in reality fund manager, can invest up to 90% in equity or up to 40% in debt portion.
2) This fund does not provide minimum % of investment for debt or gold. At a times there could be chances that it can invest only in 1 or 2 segments, but not in all 3 segments. This concept may not be appropriate for those who think of investing in such funds for diversification.
3) This fund invests in international equity where there is geopolitical risk and currency risk.
4) This fund invests up to 40% in debt, which are turned to be risky these days due to default from corporates on debt instruments.
5) You can go through all risk factors indicated in the scheme related documents before investing.
How is the Performance of existing Asset Allocation Funds?
Let us check the performance of existing asset allocator funds.
|Fund Name||1 Year||*3 Year||*5 Year|
|ICICI Prudential Multi Asset Fund||25%||9%||15%|
|Quant Multi Asset Fund||28%||15%||12%|
|HDFC Multi Asset Fund||21%||10%||11%|
|Quantum Multi Asset Fund of Funds||15%||9%||10%|
|UTI Multi Asset Fund||14%||7%||10%|
|SBI Multi Asset Allocation Fund||15%||9%||10%|
|Essel 3 in 1 Fund||15%||9%||9%|
|Franklin India Multi Asset Solution Fund||-9%||0%||4%|
Should you invest in the Motilal Oswal Asset Allocation Passive Fund of Fund NFO?
Motilal Asset Allocation Passive fund of fund would invest in equity schemes, international equity, debt schemes and in Gold ETFs. The asset allocation would be done based on the market conditions. This would depend purely on fund manager picking up right allocation during specific market conditions. There are mixed performances in this class of mutual funds. One may give it a try on this new fund. Alternatively, you can invest in some of the top performing asset allocator funds indicated above.
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