MFs line-up products that invest in equity-debt-gold

MUMBAI: Domestic mutual funds appear to be bitten by the bug to launch schemes that invest in a mix of assets such as shares, fixed income instruments and gold. Funds are seeking to capitalise on a fad among some investors seeking to spread their money across assets outside equities, with stock valuations hovering around peak levels, according to industry officials and wealth managers.

Some fund houses have launched and others are proposing to launch products that invest in multiple assets. Religare Mutual Fund’s Monthly Income Plan (MIP) Plus, which will invest in gold, fixed income and shares, is open for subscription.

Axis Mutual Fund and Taurus Mutual Fund have filed with the Securities and Exchange Board of India (Sebi) to launch a similar fund. Benchmark Asset Management had launched such a product for its affluent clients a couple of months ago. Birla Mutual Fund is mulling the launch of a multi-asset product, but plans are yet to be formalised, said CEO, A Balasubramanian.

So far, mutual funds have launched schemes that invest in a mix of shares and fixed income instruments. The multi-asset product includes gold, which has been part of investors’ portfolios since the start of the bear phase because of its reputation of being a safe haven in times of turbulence.

Wealth managers said such multiasset product is best suited for the more conservative investors, who are nervous about the prospects of stocks, which have almost doubled since last March. “This may not be the best product to invest at this juncture because if the recent rebound is just the start of a long-term bull rally, this product could underperform equity funds,” said Ashish Kehair, headwealth management, ICICI Securities. “But in case there is further global crisis, this could be an ideal product.”

Industry officials said multi-asset products have gained popularity in Europe and the US since 2009 because of lack of confidence about equities.

Some wealth managers feel the product could find takers among retail investors, but is unlikely to strike a chord with “informed investors”. “It looks like a half-hearted attempt to get investors to diversify,” said Akhilesh Singh, MD & CEO of FCH Centrum Wealth Managers. “The informed investor would choose to put money into various assets separately, rather than club them into a single scheme,” he said.

On the face of it, it does not seem to be a tax-efficient product, as it will be taxed like a fixed income fund, said a head of portfolio management services of a domestic mutual fund.