Shriram Asset Management Company recently launched the Shriram Multi Asset Allocation Fund with a core objective of achieving robust returns over an extended timeframe. The fund’s strategy revolves around investing in a diverse range of assets, including equities. This strategy encompasses investments in debt instruments and gold-silver exchange-traded funds (ETFs). The New Fund Offer (NFO) is set to conclude on September 1.

Kartik L Jain, MD and CEO of Shriram Asset Management Company, explained, “The Shriram Multi Asset Allocation Fund adopts a two-tier approach to deliver superior risk-adjusted returns. Its ‘risk parity’ approach, which balances equity, debt, and gold investments, aims to minimize volatility and maximize returns. This approach is designed to provide investors with enhanced returns,” as highlighted in a recent interview with a media portal.

Investment Options

Investors can participate in this fund through various options such as a Systematic Investment Plan (SIP), Top-up, or Systematic Transfer Plan (STP). These avenues enable investors to utilize funds from liquid or overnight investments to realize their financial and family objectives. The minimum lump sum investment amount required is Rs 5,000. For SIP, the investment starts at Rs 1,000 per installment or Rs 3,000 per quarter. Notably, these investment options do not entail any lock-in periods.

Allocation and Returns

The fund allocates 65% to 80% of its total assets to equities, selecting from a pool of 30 to 40 stocks derived from Shriram AMC’s Enhanced Quantamental Investment (EQI) model. With a significant allocation to equities exceeding 65%, the fund provides investors the opportunity to benefit from a 10% advantage in long-term capital gains tax.

Key Fund Features

Within the fund’s structure, 10% to 25% of the total funds are directed towards short to medium-term debt instruments that carry higher ratings, ensuring effective credit risk management. Additionally, the flexibility exists to allocate 10% to 25% of the fund’s assets to the Lava Gold/Silver ETF provided by the Government, along with Government-backed securities. Furthermore, the fund can invest up to 10% of its assets in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Karthik L Jain further highlights that an analysis of the past 5 years demonstrates that multi-asset allocation funds have shown minimal volatility while yielding returns comparable to equities. Additionally, these funds include investments in gold, serving as a precautionary measure against potential market crises. Gold investments act as a safeguard during times of market instability.

Tax Advantages

The new fund offers investors the benefit of a 10% lower tax rate on long-term capital gains, applicable when gains exceed Rs 1 lakh in a fiscal year. Unlike individual transactions involving equities, debt, and gold, where investors are required to pay capital gains tax separately for each transaction to rebalance their asset portfolio, transactions made by the fund manager within the fund are exempt from capital gains tax. These combined factors make the Shriram Multi Asset Allocation Fund an attractive choice for those seeking tax efficiency.