Passive Multi Asset Fund: When it comes to investing, asset allocation is considered as the cornerstone of one’s wealth creation success. Research has proven beyond doubt that the key determinant for portfolio performance is optimal asset allocation. Chintan Haria, Head – Product Development & Strategy, ICICI Prudential AMC, shares his knowledge on Passive Multi Asset Fund and explains why investors should consider it.
What is Asset Allocation?
“Asset Allocation is the practice of diversifying one’s investment across various asset classes such as equity, debt, gold etc. Within equity, today domestic investors have the option of opting for geographical diversification as well through various funds which offer exposure to different international markets. The key reason for practicing asset allocation is to ensure that the portfolio does not suffer from any sharp drawdowns in the event of an extreme development in any one asset class,” explains Chintan Haria.
Role of various Asset Classes
“Each asset class has a unique role to play in a portfolio. Through domestic equities, an investor can aim to generate capital appreciation through India growth story while exposure to global equities will provide diversification benefits and help to invest in mega trends. On the other hand, debt aims to generate stable returns and provide a cushion effect to the portfolio during times when the equity market turns volatile. Similarly, the role of gold is to act as a potential hedge against inflation,” Haria added.
Winners Keep on Changing
“Historical performance of various asset classes over the past decade and more will show that every other year, the winning asset class keeps on changing. In such a scenario, the optimal approach for one’s portfolio is to stay invested across different asset classes, such that the portfolio at all times can benefit from the gains that each asset class can offer,” he concluded.
(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)