LIC Mutual Fund has introduced a promising investment opportunity, the LIC MF Multi Asset Allocation Fund. This new fund offer (NFO) opens from 24th January 2025 & closes on 7th February 2025. This investment opportunity aims to address the evolving needs of Indian investors seeking balanced growth, reduced volatility and diversification. In this article we will cover the LIC MF Multi Asset Allocation Fund.
The market has been very volatile for the past few months (see chart below). The Nifty crossed 26,000 levels, hitting its record high in September 2024. Volatility gripped the market in the last 3 months and Nifty closed the year below the 24,000 level, down nearly 2,500 points from its record high. There are several headwinds for the Indian equities, namely cut in FY 2025 GDP growth forecast by the RBI, concerns about corporate earnings outlook, uncertainty about rate cuts, strong US Dollar and FII selling. In this situation, a multi asset allocation strategy can provide stability for your portfolio. From a long-term perspective, a multi asset allocation strategy can provide richer asset class diversification to your portfolio and balance risk / returns across investment cycles.
Source: NSE. Period: 1st Sept 2024 to 10th Jan 2025
Multi Asset Allocation funds are hybrid mutual fund schemes which invest in 3 or more asset classes. According to SEBI regulations, multi-asset allocation funds must invest a minimum of 10% each in at least 3 asset classes. Apart from the two most popular asset classes, debt and equity, these schemes invest in asset classes like commodities (e.g. gold, silver), international equities, real estate investment trusts (REIT), infrastructure investment trusts (InvITs) etc. The fund manager decides the proportional allocation to each asset class based on the market conditions with the objective of balancing risks and returns.
Source: LIC MF, NSE, Crisil, MCX. The above data has been taken from the following indices: Equity: Nifty 500 TRI, Debt: Crisil Composite Bond Index, Gold: MCX Spot Price (data as on 31st December 2024)
(Source: LIC MF. The above data has been taken from the following indices: For Overnight Debt: Nifty 1D Rate Index. For Short Term Debt: Crisil 1 Year T Bill Index, For Long Term Debt: Crisil 10 Year Gilt Index, For Large Cap: Nifty 50 TRI, For Mid cap: Nifty Midcap 100 TRI, For Small-cap: Nifty Small cap 250 TRI, For International: S&P 500 PRI (Converted to Rupee Returns), For Finance: Nifty Financial Services TRI, For Gold: MCX Spot Price of Gold, For Healthcare: Nifty Healthcare TRI. NSE, Crisil, MCX; as on 31st December 2024)
Source: LIC MF, NSE, Crisil, MCX; Data from 1st July 2009 till 31st December 2024
Source: LIC MF, NSE, Crisil, MCX (data as on 31st December 2024)
Historically, Multi Asset Allocation has helped to generate risk adjusted returns over the long term. The chart below shows the performance of a Multi Asset Portfolio when compared to other individual asset classes.
Source: LIC MF, NSE, CRISIL, MCX (data as of 31st December 2024)
The comparative returns of different Asset classes from 1st July 2009 till 31st December 2024, rolled on a 3-year basis, are illustrated in the graphic below. The Multi Asset Allocation returns were more than 10% in 70% of the instances (observations).
Source: LIC MF, NSE, CRISIL, MCX (data as of 31st December 2024)
The LIC MF Multi Asset Allocation Fund is an open-ended scheme that strategically invests across three core asset classes: Equity, Debt, and Gold. By combining these components, the fund endeavors to deliver long-term capital appreciation while mitigating risks. The fund managers for the LIC Multi Asset Allocation Fund are Mr. Nikhil Rungta for the Equity component, Mr. Sumit Bhatnagar for Equity and Commodity component and Mr. Pratik Harish Shroff for the Debt Component.
The fund follows a Trident Approach while allocating funds between various asset classes. (See illustration)
Source: LIC MF
The allocation across asset classes is as follows:
This fund is ideal for:
The LIC MF Multi Asset Allocation Fund offers a unique combination of growth, stability, and resilience. Whether you’re a seasoned investor or just starting on your investment journey, this fund provides a diversified approach tailored for long-term wealth creation in the current Indian dynamic market. Speak to your financial advisor or an AMFI registered mutual fund distributor to find out if the fund is suitable for your investment needs.
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.
LIC Mutual Fund was established on 20th April 1989 by LIC of India. Being an associate company of India's premier and most trusted brand, LIC Mutual Fund is one of the well known players in the asset management sphere. With a systematic investment discipline coupled with a high standard of financial ethics and corporate governance, LIC Mutual Fund is emerging as a preferred Investment Manager amongst the investor fraternity.