Fund of funds launch spree moves to hybrid, diversified equity space

5 all-in-one FoFs to plate up equity and debt, some with lower volatility baked in

The renewed activity in the fund of funds (FoF) space, previously limited to the debt-plus-arbitrage category, is now shifting towards diversified equity and hybrid offerings. At least five such equity and multi-asset schemes are lined up for launch in the coming months, according to scheme documents filed with the Securities and Exchange Board of India.

 

The upcoming launches include Edelweiss Multi Asset Omni FoF, Mirae Asset Multi Asset Active FoF, Union Diversified Equity All Cap Active FoF, Mirae Asset Multi Factor Passive FoF, and SBI Dynamic Asset Allocation Active FoF. Zerodha Fund House launched a Multi Asset Passive FoF last week. 

According to mutual fund (MF) executives, these schemes serve as a one-stop option for investors looking to delegate asset allocation or scheme selection within an asset class to a fund manager. While an equity FoF invests in a mix of active or passive equity schemes, multi-asset FoFs include equity, debt, and commodity funds in their portfolios. 

Although they fall under the same category, these FoFs differ in asset composition, return profiles, and risk levels.

 

For instance, Edelweiss MF’s FoF plans to invest 65–80 per cent in the fund house’s active and passive equity schemes, with the remainder going into debt and commodity funds.

 

“The Multi Asset Omni FoF offers balanced exposure to multiple asset classes and blends active and passive strategies within a single scheme. It’s designed for diversification, helps navigate market cycles, and suits investors focused on long-term wealth creation,” said Radhika Gupta, managing director and chief executive officer, Edelweiss MF. 

 

Zerodha’s newly launched Multi Asset Passive FoF, meanwhile, invests solely in passive schemes with a fixed asset mix.

 

“It’s a ready-made solution for investors looking to diversify through a single investment, with the added advantage of tax efficiency during portfolio rebalancing,” said Vishal Jain, CEO, Zerodha Fund House.

 

While the convenience of a bundled product is appealing, experts caution that these strategies come with trade-offs.

 

“They’re ideal for investors seeking a hands-off, all-in-one solution. But that also means holding a concentrated portfolio, which can become risky if the fund or asset management company runs into trouble,” said Jiral Mehta, senior research manager, FundsIndia. “This kind of fund may also throw off your existing allocation, leading to unintended over- or underexposure,” she added.

 

Currently, there are around 25 such schemes in the market, most following a multi-asset approach. Together, they manage about ₹43,000 crore, with a large chunk of assets held in FoFs run by ICICI Prudential MF.

 

While most fund houses already operate active multi-asset funds, the FoF structure is being used to offer a differentiated product within the category.

 

“ICICI Multi Asset Fund mandates a minimum 10 per cent allocation each to equity, debt, and gold to maintain balance. In contrast, the Asset Allocator Fund, structured as an FoF, allows dynamic allocation across asset classes with no floor, offering greater tactical flexibility,” said a spokesperson for ICICI Prudential MF. 

All the flavours, none of the fuss

 

From asset mix to risk profile, these FoFs handle the heat so you don’t have to

 

·         Equity and multi-asset FoFs see renewed activity

 

·         Launches lined up from Edelweiss, Mirae, SBI, Union, Zerodha

 

·         Designed for investors seeking guided asset allocation

 

·         FoFs differ in underlying asset mix, return outlook, and risk

 

·         25 such schemes in market, managing ₹43,000 crore