Amid global tensions, how an all-in-one investment approach shines through

Diversification or investing in a variety of asset classes is the right step to a healthy investment plan. However, preference for a particular asset due to changing market conditions, fluctuation in interest rates and other factors like inflation is a natural phenomenon.

But with time, your portfolio should also evolve. An all-in-one approach to investing may be a wise decision. Based on your risk-return profile, horizon, investment objectives, try creating a portfolio which is not skewed in favour of one asset class.

Experts believe the majority of volatility in the portfolio can be addressed by asset allocation instead of chasing one asset class - equity, debt or gold. However, overexposure to any one asset class may also not fulfil the diversification needs of thoughtful investors.


Just as short term volatility in stock markets impacts your return in equities, rise in bond yields will have implications for debt investors. Governments and companies typically issue bonds as a way of raising money to finance spending. Change in interest rates has a bearing on bond yields. When yields move up, NAV of debt funds comes down.

Besides the two most preferred asset classes, gold can play a strategic role by acting as portfolio diversifier for investors at the time of a crisis. However, gold prices are heavily influenced by geo-political events coupled with inflation and any signs of slowdown in the global economy.

The Ultimate Asset Allocation Solution
Implementing the right asset allocation strategy can help investors in balancing risk and reward. The amount invested needs to be carefully split into multiple assets such as equity, fixed income, cash and cash equivalents, etc.

Here’s an asset allocation strategy that can help investors build long term wealth calculating risk vs return in the long run. The 12:20:80 Rule stands for 12 months of emergency funds set aside; 20 percent to be invested in gold and 80 percent to be put in equity providing a simple solution for long term goals.

How does the 12:20:80 Rule work?
By using this method, the investor invests an amount equivalent to 12 months of his expenses in a Liquid Fund to ensure safety and liquidity over returns. This 12 months of safe money parked in liquid funds carries low default risk as Quantum Liquid Funds invest only in government securities, treasury bills and top rated PSU / PFI instruments.

Of the total invested amount, 20 percent of the portfolio assets are invested in gold through Gold Funds and Gold Saving Funds while the remaining 80 percent is invested in equities through Equity Fund of Funds and Value Funds. For instance, if you plan to create a portfolio starting Rs 1 lakh - Rs 20,000 will be invested in Gold Funds while Rs 80,000 will be placed in Equity Funds.

To understand this 80 percent equity allocation, let’s break this further for your understanding.

This Rs 80,000 will be divided in 3 parts

• Rs 56,000 in Quantum Equity Fund of Funds (70 percent of total equity allocation)
• Rs 12,000 in Quantum Long Term Equity Value Fund (15 percent of total equity allocation)
• Rs 12,000 in Quantum India ESG Equity Fund (15 percent of total equity allocation)

Equity Fund of Funds (FOF) is a basket of 5-10 well researched third party equity schemes. They can help you invest in units of other top equity funds through a single fund that may or may not be managed by the same Asset Management Company which is managing the FOF. The Quantum Equity FOF selects the most suitable of 400 equity funds schemes with a minimum 5 years track record. This reduces the hassle of making and tracking multiple investments.

This 70 percent of total equity allocation is strategically placed in a fund consisting of Midcap, Large Caps, Flexicaps, Bluechips and Growth funds. Of the remaining 30 percent, 15 percent allocation is based on a mutual fund following the tenets of value investing. The Quantum Long Term Equity Value Fund selects schemes with over 15 years track record to deliver long-term risk adjusted returns. In line with its principles of responsible investing, the Quantum India ESG Equity Fund invests in shares of companies that meet the criteria on non-financial parameters like Environmental, Social and Governance. Quantum India ESG Equity Fund is one of the first ESG funds launched in India. This helps you build a resilient portfolio and get the needed diversification.

There are a myriad of fund styles and choosing the right one can be a daunting task for many investors. Opting for this all-in-approach can be a great move for investors in current market conditions. Through this asset allocation strategy, you can get a chance to invest in a ready-made portfolio.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate, and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual fund investments are subject to market risks read all scheme related documents carefully.