Are You Looking for Stability and Growth in Your Portfolio? Read This

Although the Indian equity markets have scaled new highs, the last couple of months have been rather volatile. In the case of small caps and mid caps, volatility has been even more apparent. A variety of factors in play have triggered this volatility...

Graph: Potential risks to financial stability as per the RBI

RBI's Systemic Risk Survey, November 2023
(Source: RBI Financial Stability Report, December 2023)

The RBI too has taken cognisance of many of the risks involved in its latest Financial Stability Report. Even in the March 2024 bulletin, in the chapter State of the Economy, the RBI concludes that the outlook is shrouded with layers of uncertainty, exacerbated by geopolitical and extreme weather risks as well as fragmenting forces.

In such times, you need to tune out the market noise and safeguard your wealth to fulfil your financial goals.If you have been thoughtful and invested in good mutual fund schemes in your portfolio, our recommendation to you would be to not sell in a panic by having a short-term view.

Even 1 year in equities, in our view is short. You need to keep a long-term view (of over 3 years) and ensure that your portfolio is well-diversified.

Graph 2: Performance of equity, debt, and gold in the respective calendar years.

Data as of March 28, 2024
(Source: ACE MF; Past performance may or may not be sustained in the future. Indices Used: Crisil Composite Bond Fund Index, MCX Gold Spot, Nifty 50)

The graph above reveals that in times when equities have disappointed investors - as they did in the calendar years 2015, 2016, 2018, and 2022 -- it is usually debt and gold, that fare well.

The point is that there is no consistent winning asset class, markets are cyclical (full of ups and downs), and not all asset classes move in the same direction always.

For this reason, you need to have a tactical allocation to equity, debt, and gold. And in this respect, a Multi Asset Allocation Fund is a meaningful choice. It provides you, the investor, the opportunity to have exposure to equity, debt, and gold - the three key asset classes - with a single fund.

While equities are essential to building wealth over the long term and with the potential to cope with inflation, they are subject to drawdowns. In the short term, when the equity market may be volatile, you need debt and fixed-income instruments to add stability to the portfolio. to be a safe haven, command a store of value, and be an effective portfolio diversifier. Considering this, gold is already exhibiting its lustre as smart investors and central banks around the world are buying gold.

While Equity investments have the potential to generate capital appreciation over time. When interest rates seem to have peaked and bond yields are attractive, it makes sense to allocate some part of your portfolio to debt and fixed-income instruments. Likewise, now when there is uncertainty surrounding the world, holding gold some gold in your portfolio may prove to be a good strategic diversifier as it generally has an inverse correlation with Equities.

The exposure to equity, debt, and gold, with a Multi Asset Allocation Fund could potentially earn you better risk-adjusted returns to achieve your long-term financial goals with peace of mind.

Note, this pearl of wisdom by Benjamin Graham, the father of value investing and the author of the widely acclaimed book, 'The Intelligent Investor'.

A Multi Asset Allocation Funds with tactical allocation to equity, debt, and gold, aims to spread the risk. As an investor, you can rely on the fund manager to decide on strategic positioning for these three key asset classes to help optimise the returns.

Here are the five key reasons to invest in Quantum Multi Asset Allocation Fund

A Multi-Asset Allocation Fund is an ideal choice for a medium-to-long-term investment horizon. It can help you manage the risk well without compromising on the growth potential.

If you do not have the time or the expertise to manage a diversified portfolio on your own and want to simplify the investment process, you can take advantage of the Quantum Multi Asset Allocation Fund.

The Quantum Multi Asset Allocation Fund offers better tax efficiency than pure debt-oriented mutual fund schemes and fixed-income instruments.

If you are looking to take advantage of this indexation benefit, consider opting for the Quantum Multi Asset Allocation Fund.

Be a thoughtful and wise investor, who is mindful & does not invest just for the returns.

To learn more about Quantum Multi Asset Allocation Fund and invest, click here.   

Happy Investing!

^*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer, Statutory Details & Risk Factors: The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Mutual Fund investments are subject to market risks read all scheme related documents carefully.

Above article is authored by Quantum.

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