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DSP Multi Asset Allocation Fund: Main Objective & How can one invest?

DSP Multi Asset Allocation Fund

The DSP Multi Asset Allocation Fund was introduced, according to DSP Mutual Fund. The public subscription period for the plan began on September 7, 2023, and it will end on September 21, 2023. Between 35 and 80% of its investments may be made in stocks, with up to 50% permitted to be in foreign stocks, according to DSP Mutual Fund House. Additionally, it may invest 10–50% in debt, 10–50% in gold ETF, 0–20% in other commodities through ETFs & ETCDs, and up to 10% in REITs & InvITs.

DSP Multi Asset Allocation Fund

The DSP Multi Asset Allocation Fund (DSP MAAF), an open-ended strategy that attempts to provide investors with long-term returns similar to what stocks may give but with increased resilience against market declines, was recently unveiled by DSP Mutual Fund. DSP MAAF seeks to minimize overall risk for investors by helping them diversify their holdings across a variety of asset classes, including local and foreign stocks, debt instruments, gold ETFs, other commodities, and ETFs and exchange-traded commodity derivatives (ETCDs).

The long-term predicted returns from various asset classes, their actual volatility, and the correlation between each asset class will all be taken into consideration when allocating assets by DSP MAAF. The essential concept is that by adding assets with low correlation to a portfolio, even if one asset class has a slump, another one could perform well, thus easing the investor experience. A multi-asset model portfolio’s historical returns have also shown returns comparable to those from domestic stocks with noticeably lower volatility than equities.

Main Objectives of the DSP Multi Asset Allocation Fund

The Scheme’s investment objective is to provide long-term capital growth via a variety of asset classes, such as equities and equity-related securities, debt and money market instruments, commodities ETFs and exchange-traded commodity derivatives, as well as foreign securities. The scheme’s investment goal cannot, however, be guaranteed to be realized. The most underestimated aspect of investment, according to Kalpen Parekh, MD & CEO of DSP Mutual Fund, is time.

Consequently, we aim to propose a method that lessens volatility by boosting the variety of asset classes. Our multi-asset fund combines international stocks, bonds, and precious metals with Indian equities, allowing investors to benefit from the cycles of each and ultimately remain invested in the fund for longer due to fewer swings compared to a single asset class.

How can one invest in a DSP Multi Asset Allocation Fund?

  • The minimum investment required to participate in the program is $100 per plan or option, although multiples of Re 1 are also acceptable. The amount that may be invested is not capped.
  • Up to 50% of DSP MAAF’s equity investments may be in foreign securities. Its equity investment range is 35 to 80 percent.
  • In addition, it may invest up to 10% in REITs and InvITs, 10-50% in debt, 10-50% in Gold ETF, 0-20% in other commodities through ETFs & ETCDs, and up to 50% in Gold ETF.

How will the scheme benchmark its performance?

The scheme’s performance will be compared to 40% NIFTY500 TRI, 20% NIFTY Composite Debt Index, 15% domestic gold spot prices (based on LBMA gold daily spot fixing prices), 5% iCOMDEX Composite Index, and 20% MSCI World Index.

Any Entry or exit loads to this Scheme

Investors do not have to pay anything to park their gains in this plan since there is no “Entry Load” involved. It would also be “Nil” for the “Exit Load” charged.

Who will manage this scheme?

The fund managers for the scheme’s equity investments will be Aparna Karnik and Prateek Nigudkar, the fund managers for the scheme’s debt investments will be Sandeep Yadav, the fund managers for the scheme’s international investments will be Jay Kothari, and the fund manager for the scheme’s commodities investments will be Ravi Gehani.

Does the fund contain any inherent risk?

According to the information in the plan information document, the scheme contains “Very High Risk” and is most suitable for investors who accept that their capital will only be exposed to extremely high risk. If investors have any questions about whether the product is right for them, they should speak with their financial advisers.

DSP Multi Asset Allocation Fund Key things to know

  • Indexation, as it relates to capital gains taxes and as it applies to debt schemes, will also be advantageous to long-term investors.
  • Historical data shows that after taking into account the advantage of indexation, debt or equity taxation does not materially affect the net returns in the investor’s hands if they contemplate allocating a minimum of three years to such a fund.