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 realized 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 demonstrated returns comparable to those from domestic stocks with noticeably lower volatility than equities.
“Time is the investing aspect that is most undervalued. Compounding happens when investors commit their time. However, brief price swings prevent the majority of us from maintaining our investments. Consequently, we aim to propose a method that lessens volatility by boosting the variety of asset classes. According to Kalpen Parekh, MD & CEO of DSP Mutual Fund, “Our multi-asset fund combines Indian equities with foreign stocks, precious metals, and bonds to enable investors to benefit from cycles of each of these and ultimately stay invested in the fund for longer due to lower fluctuations as opposed to a single asset class.
Today’s open DSP Multi Asset Allocation Fund: The essentials to know
1) As of today, September 7th, 2023, subscribers may subscribe to the DSP MAAF new fund offer (NFO), which will remain open until September 21st, 2023.
2) Up to 50% of DSP MAAF’s investments may be made in foreign equities and between 35% and 80% in domestic stocks.
3) It may also invest up to 10% in REITs and InvITs, 10-50% in debt, 0-20% in other commodities through ETFs and ETCDs, and 10-50% in Gold ETF.
4) Indexation, as it relates to capital gains taxation and is relevant to debt schemes, will likewise be advantageous to long-term investors.
5) Historical data shows that, after taking into account the advantage of indexation, debt or equity taxation does not materially affect the net profits in the investor’s hands if they contemplate allocating a minimum of three years to such a fund.
