MF QueryBoard

Can you please explain the concept of multi-asset funds? Also, please suggest some top-performing options for a 5-7 year period. - Gowtham Thakur [EasyDNNnews:PaidContentStart]

10 per cent allocated to each of them. These funds often invest in commodities, fixed income, and equities. Multi-asset allocation funds can be categorised as either equity-oriented or nonequity-oriented funds in terms of taxability. A fund that invests more than 65 per cent of its assets in domestic equities is said to be equity-oriented. The asset classes are not strictly allocated in multi-asset allocation funds. They may have a dynamic allocation based on the state of the market.

Therefore, a multi-asset allocation fund would be considered equity-oriented if it maintains more than 65 per cent allocation to stocks or else it would be considered non-equity-oriented. The tax treatment of multi-asset funds is the same as that of conventional equity funds – tax-free long-term capital gains up to ₹1 lakh every fiscal year. Gains over ₹1 lakh are subject to a 10 per cent tax rate. Taxes on short-term capital gains are levied at a rate of 15 per cent. Short-term capital gains are taxed in accordance with the investor’s Income Tax bracket after being added to income. After indexation, long-term capital gains are subject to a 20 per cent tax rate. 

Your risk tolerance, investment horizon and expected returns will all factor into your decision to invest in these funds. These funds have a high level of risk because they are often equityoriented mutual fund schemes. To achieve returns that outpace inflation, an investor should aim to hold their investments for at least 5-7 years. Multi-asset funds are only appropriate for you if you have a high tolerance for risk and a long-time horizon for investing. The top three multi-asset investments according to three-year, five-year and seven-year returns are shown in the following table

I am a new investor and want to start my investments with mutual funds. Could you suggest some good funds? - Tejas Bakori

An index or mutual fund is a preferable choice for investors who are investing in stocks for the first time. You can invest in mutual funds that have financial goals and capital investment that match your risk tolerance. There are several mutual funds accessible. It offers diversity, allowing you to start with little sums, and lets you choose a systematic investment plan (SIP) that allows you to make small investments every month or every three months. Some recommend using a multi-cap fund. But in our opinion, it is advisable to establish your portfolio’s construction on a Large-Cap basis.

An equity fund that invests at least 80 per cent of its corpus in large-cap equities is known as a large-cap mutual fund. These funds research the stocks that make up the top 100 listed businesses on the stock exchange, ranked by market capitalisation. Investors can determine the relative size of a firm by looking at its market capitalisation. In comparison to smaller businesses, large-cap corporations are assumed to be financially stable and to be somewhat safer. These equities don’t fluctuate as much as Mid-Cap and Small-Cap stocks. They provide a favourable entry point into the stock market because they do not collapse as violently during a down market. As a first-time investor you should also consider things like your risk appetite, investment goal, etc. and then shortlist and choose one mutual fund. Our recommendations are include Axis Blue-Chip, Mirae Asset Large-Cap and ABSL Frontline Equity.

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