Shriram AMC to launch multi asset allocation fund, NFO to open on Friday

Shriram Asset Management Company, a division of Shriram Group, is set to launch the Shriram Multi Asset Allocation Fund on Friday, August 18. The new fund aims to provide long-term inflation-adjusted wealth creation through exposure to multiple assets, including equity, debt, and exchange-traded funds (ETFs) in gold and silver. The New Fund Offer (NFO) will be open until September 1.

The fund's corpus will have between 65 and 80 per cent invested in equity, encompassing 30 to 40 stocks from Shriram AMC's proprietary Enhanced Quantamental Investment (EQI) model. This model employs statistical data to guide investment decisions for improved fund performance, integrating both quantitative and fundamental inputs for portfolio construction. A minimum allocation of 65 per cent to equities enables investors in this fund to benefit from a Long Term Capital Gains tax of 10 per cent.

Additionally, the fund will allocate 10 to 25 per cent of its assets in high-quality (AAA) Short to Medium term debt, primarily in government and government-backed securities to minimise credit risk; 10 to 25 per cent in gold/silver ETFs, with an option to include up to 10 per cent in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Kartik L Jain, managing director and chief executive officer of Shriram Asset Management Company, stated, “Analysis of the last five years shows that Multi Asset Allocation Funds have exhibited less volatility with equity-like returns. Thus, this category is an attractive option for goal planning. The exposure to gold also serves as a hedge against market volatility, particularly during crisis periods, reducing drawdown and facilitating quicker recovery to previous levels.”

Investors can contribute to this fund through Systematic Investment Plans (SIP), top-ups or Systematic Transfer Plans (STP) from liquid or overnight funds to fulfil their financial and family objectives. The minimum lump sum investment is Rs 5,000, while for SIPs, it is Rs 1,000 per month or Rs 3,000 per quarter, with no lock-in period.

The fund offers a Long Term Capital Gains tax (LTCG) benefit at 10 per cent (plus surcharge and cess) if capital gains exceed Rs 100,000 in a fiscal year. Rebalancing asset allocation through individual buying and selling of equity, debt, or gold might incur capital gains tax with each transaction. However, when the fund manager transacts within the scheme, there is no capital gains tax, making this fund a tax-efficient investment choice.

Jain added, “The Shriram Multi Asset Allocation Fund has a two-tier approach to providing superior risk-adjusted returns. Firstly, its ‘risk parity’ strategy among equity, debt, and gold aims to minimise volatility and maximise returns. Secondly, our proprietary EQI model combines quant and fundamental analysis to build a risk-adjusted equity portfolio aimed at delivering consistent alpha. We use three factors: low volatility, momentum, and low valuation, which have shown very positive outcomes in both back-testing and forward testing. We believe this single fund will strongly resonate with our investors.”

Last year, Shriram Group revitalised its mutual fund business, partnering with US-based Mission1 Investments LLC as a strategic ally. With this collaboration, Shriram AMC has broadened its product portfolio, offering relevant and differentiated investment solutions to its customers. The focus on ‘Performance, Products, and Placement’ aims to lay the groundwork for ongoing growth.