Bajaj Finserv MF adds to variety in multi-asset allocation category

Takes the dividend yield route to differentiate in the emerging hybrid category

The multi-asset allocation category, which has the most differentiated offerings in the mutual fund (MF) space, has seen another distinguished addition in Bajaj Finserv Multi Asset Allocation Fund.

The fund house has taken the dividend yield route to generate regular income while also lowering the volatility of the equity portion. According to the fund house, the equity allocation will generally range from 65-70 per cent.

"We will look for companies that are growing their profits at a good pace and giving healthy dividends. As the profits grow, the chances of capital appreciation are also higher. In addition, the volatility in stock prices of higher dividend-paying companies is also lower," said Nimesh Chandan- CIO- Bajaj Finserv Mutual Fund.

Chandan said that currently, one could create a good portfolio with an average dividend yield of 1.5-1.8 per cent.

The scheme will invest 20-25 per cent in fixed-income instruments and 10-12 per cent in gold.

The multi-asset allocation category saw a slew of new launches last year as mutual funds’ focus shifted to hybrids after the change in the debt fund taxation at the start of the financial year (FY24). Mutual funds have looked to innovate in the multi-asset space.

Many of the new launches have chosen to opt for an asset allocation strategy that will qualify for the erstwhile debt fund taxation rather than taking the equity taxation route, which was the norm before the tax change. The funds in these categories also differ from the asset allocation point of view with some choosing higher commodity or equity derivative exposure.

Growing interest

23 total number of multi-asset funds; has doubled since April 2023

Rs 74,000 crore total assets under management, 167 per cent rise in one year

2.1 million total investment accounts

> Schemes differ from asset allocation, taxation point of view