Last Updated on December 29, 2021
Nippon India Multi-Asset Fund is an open-ended scheme investing in Equity (including international equity), Debt and Exchange Traded Commodity Derivatives and Gold ETF. In this review, suggested by Basudeb Roy, we consider if it makes sense to use this fund as the core component of a portfolio.
The fund was started in Aug 2020, so there is not much history to study its performance. The fund has an AUM of 1,095.64 Cr as of June 30th 2021. According to the scheme information document, the investment objective is to seek long term capital growth by investing in equity and equity-related securities, debt & money market instruments, and Exchange Traded Commodity Derivatives and Gold ETF as permitted by SEBI from time to time.
- The fund can hold 50-80% of Equity & Equity related securities (including overseas securities /Overseas ETF)
- 10% to 20% of Debt & Money Market Instruments
- 10% to 30% of Gold ETF and Exchange Traded Commodity Derivatives (ETCDs). Here 10% gold exposure is typically constant with additional exposure to other commodities.
The asset type allocation history of the Nippon India Multi-asset fund is shown below.
The domestic equity exposure has hovered close to 50%, meaning the fund will be taxed like a non-equity fund. The international equity exposure has hovered close to 20%. The domestic mutual fund units refer to Nippon India ETF Gold Bees.
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Exposure to commodity futures is included in the cash equivalent bin. For example, as of June 30 2021, the fund held 10.74% in commodity futures.
- Gold 7.09%
- Crude Oil 1.53%
- Metal Index 1.10%
- Silver 1.0%
The market cap allocation history of Indian equities held by the fund is shown below. It has a large and midcap fund-like profile.
So far, the fund has not strayed beyond the AAA rating, as seen below.
In the bond portfolio, a majority is intermediate-term (3-5 years) bonds.
The expense ratio history is shown below. The direct plan TER (total expense ratio) was lowered for a few months (possibly to bring in some AUM)
Considering the fund’s wide range of asset class options, it has chosen an understandably weird benchmark: 50% of S&P BSE 500, 20% of Crisil Short Term Bond Fund Index & 30% of Thomson Reuters – MCX iCOMDEX Composite Index.
It is not clear if the BSE 500 is a price index or a total return index. What matters more is that in its short history, the fund is yet to beat the benchmark.
| 6 Months | Since Inception | |
| Nippon India Multi Asset Fund | 27.46 | 26 |
| B:50% of S&P BSE 500, 20% of Crisil Short Term Bond Fund Index & 30% of Thomson Reuters – MCX iCOMDEX Composite Index | 28.91 | 28.92 |
| AB:S&P BSE Sensex TRI | 29.04 | 37.59 |
In principle, a multi-asset fund investing in Indian equity, international equity, bonds, and commodities is a good idea. It can be used by a savvy investor who appreciates asset allocation and regular rebalancing among assets as the main (or only fund) in a portfolio.
The difference between theory and practice is often the packaging. Even if the non-equity fund like taxation is not a problem, an inaccessible benchmark, active management that underperforms, high and fluctuating fund management fees and wide flexibility in asset allocation (see Motilal Oswal Asset Allocation Passive FoFs Review) are huge dampeners against funds like Nippon India Multi-Asset Fund. Therefore we cannot bring ourselves to recommend investing in this fund. At the very least, it needs a little more history and a lot better performance to be taken seriously.
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