Edelweiss Mutual Fund has announced the launch of Edelweiss Multi Asset Allocation Fund that invests across various asset classes. The fund will invest in equity, debt, commodities, as well as units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
The scheme opened for public subscription on June 5, 2023, and investors can participate in NFO till June 19, 2023. Being an open-ended scheme, it will re-open for continuous sale and repurchase on or before July 4, 2023.
Interested individuals can start with a minimum investment of Rs. 5,000 per plan or option, and in multiples of Re 1 thereafter. There is no specified upper limit for investments.
Multi-Asset Allocation Fund
Typically, investors try not to keep all their eggs in one basket. Multi-Asset Allocation Mutual Funds allocate investments from depositors across different asset classes. These funds are meant to invest at least 10 per cent in at least any of three different categories such as equity, debt, gold or commodities with REITs units issued by REITs/InviTs.
Multi Asset Allocation Funds has the flexibility to tap into an asset category when there is a bull run, or it can protect assets by investing in less volatile assets during market headwinds.
The fund house says that the suitable investment horizon for investors in Edelweiss Multi Asset Allocation Fund is three years and above. The fund house claims that it is suitable for investors seeking returns that are adjusted to risk and exhibit relatively lower volatility.
Further the fund offers a lower LTCG tax (20 per cent after indexation) compared to traditional fixed income products.
Allocation & Risk Of The Scheme
The scheme involves ‘very high risk’ as per the Scheme Information Document and investors should understand that their principal is at very high risk. This is due to class of assets the scheme invests in. The fund house has outlined its asset allocation strategy to be followed in normal circumstances.
For equity and equity-related instruments, the scheme plans to allocate between 10 per cent and 80 per cent of its total assets. This is categorised as high risk due to the volatile nature of equity markets.
It will allocate 10-80 per cent of the assets in debt and money market instruments, making it a low to moderate risk profile, offering investors a more stable investment option.
About 10 per cent and 30 per cent of the total assets will be invested in a moderate to high-risk assets like commodity ETFs, Exchange Traded Commodity Derivatives (ETCDs), etc.
Further, the scheme may allocate a portion of its assets, 0-10 per cent, in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), considered moderate to high risk.
Individuals should carefully assess their financial goals and risk tolerance before making any investment decisions in the scheme.