DSP Multi Asset Allocation Fund open for subscription: All you should know

DSP Mutual Fund has launched the DSP Multi Asset Allocation Fund (DSP MAAF), an open-ended scheme that will invest in asset classes like domestic equities, international stocks, debt instruments, gold ETFs, other commodities and ETF & Exchange Traded Commodity Derivatives (ETCDs), aiming to reduce overall risk.  

The new fund offer (NFO) will run from September 7 to 21, 2023.

"“The most underrated factor in investing is time. Once investors devote time, compounding follows. However, temporary price fluctuations distract most of us from staying invested. Hence, we want to offer a solution which reduces fluctuations by increasing the asset classes. Our multi-asset fund adds global stocks, precious metals & bonds and Indian equities, enabling investors to take advantage of cycles of each of these and eventually stay invested in the fund for longer due to lower fluctuations. Historical data has repeatedly shown that the best-performing asset class can vary significantly over the years, making it difficult to predict the winner each year,” DSP said in a release.

Key Features

DSP MAAF can invest between 35-80% in equities, of which up to 50% can be in international equities. It can also invest 10-50% in debt, 10-50% in Gold ETF, 0-20% in other commodities through ETFs & ETCDs and up to 10% in REITs & InvITs.

The fund will not get equity taxation benefits. 

Investors can invest under the scheme with a minimum investment of ₹100 per plan/option and in multiples of Re 1. There is no upper limit for investment.

Long-term investors will also get the benefit of indexation when it comes to capital gains taxation, as applicable to Debt schemes. If investors consider a minimum three-year allocation to such a fund, then historical data indicates that after considering the benefit of indexation, debt or equity taxation does not cause a material difference in the net returns in the hands of the investor. 

DSP MAAF will allocate assets based on 3 key but simple factors – long-term expected returns from different asset classes, their realized volatility and the correlation among each asset class. 

The key idea is that when assets with low correlation among one another are added into a portfolio, even if one asset class faces a downturn, another one might perform well, potentially smoothening out the investor experience. Further, historical returns of a multi-asset model portfolio have shown returns similar to those from domestic equities with significantly lesser volatility than equities. 

The performance of the scheme will be benchmarked against 40% NIFTY500 TRI + 20% NIFTY Composite Debt Index + 15% Domestic Price of Physical Gold (based on London Bullion Market Association (LBMA) gold daily spot fixing price) + 5% iCOMDEX Composite Index + 20% MSCI World Index.

The New Fund Offer for DSP MAAF opened for subscription on September 7th, 2023 and will close on September 21st, 2023.  

According to Kalpen Parekh, Managing Director, of DSP Mutual Fund, equity is the only asset capable of outperforming inflation and instead of trying to time market entry points, investors should safeguard their interests by diversifying across various asset classes. 

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” charged would also be “Nil”.

Aparna Karnik and Prateek Nigudkar will be the fund managers for the equity investment of the scheme. Sandeep Yadav will be the fund manager for debt investment of the scheme. Jay Kothari will be the fund manager for overseas investments of the scheme andRavi Gehani will be the dedicated fund manager for commodities investments of the scheme.