Weak markets are making fund houses look at new ways to generate investor interest in products. The latest attraction is a combo deal — schemes that invest in gold, debt and equities. Also, they are betting big on US markets to reap the advantages of the falling rupee.
This comes at a time when the net asset values (NAVs) of multiple asset funds, which invest in gold, debt and equity, have hit their 52-week highs and funds with direct or indirect exposure to stocks of USbased companies have made handsome gains.
Multiple asset mutual funds (MFs) have given 8.2%-10 .9% returns in the past year (till June 22). Except MFs that invest in the defensive FMCG and pharmaceuticals sectors and funds with exposure to stocks of overseas companies, all other equity MF categories were in the red in the one-year period.
"If these three assets (gold, equity and debt) are combined , they would be able to contain losses much more effectively ," says Anil Rego, CEO, Right Horizons, a wealth management firm.
"It is easier to take this product to investors as the risks involved are much less," says Rupesh Nagda, head, investment advisory and products , Alchemy Capital Management . "It is a good option for retail investors as it would be difficult for them to keep shifting money from one asset class to the other," he says. Moreover, investors also do not have much insight into how different asset classes behave in such volatile conditions , Nagda says.
With equities not doing well over the five-year period, usually considered a benchmark for long-term performance, investors are losing patience leading to a sense of fatigue among them, say experts. Diversified equity MFs have moved up by a measly 5.5% a year in the past five years.
Several funds (including sector-oriented funds) that invest in stocks of US-based firms have, however,made it to the top-10 list in the last one year. Incidentally, the best performing equity MF for the period invests exclusively in NASDAQ-100 stocks.
Experts however advise caution on this front. With the rupee plunging to new lows against the dollar and the US markets unlikely to repeat the past year's performance, the prospect of making big gains are much less, they say.
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'I made my money by selling too soon.'
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