Josephine Norton
The Nippon India Multi Asset Allocation Fund is a mutual fund that has been in existence since August 2020. The fund seeks long-term capital growth by investing in equity and equity-related securities, debt, money market instruments, and Exchange-Traded Commodity Derivatives, Gold, and Silver ETFs as permitted by SEBI. With an expense ratio of 0.3%, the fund has generated the highest return among Multi-Asset Allocation funds in the last 3 years. As of October 14, 2024, the Net Asset Value (NAV) of the fund was 21.81, with a 1-day change of +0.47%. The fund has a medium size of ₹4,344 Crores worth of assets under management (AUM) and has delivered average annual returns of 20.76% since its launch.
| Characteristics | Values |
|---|---|
| Category | Multi Asset Allocation |
| Net Asset Value (NAV) | ₹21.7856 as of 15th October, 2024 |
| Rank | Not available |
| Total Investment | ₹4343.57 Cr |
| Expense Ratio | 0.3% |
| Risk Level | Medium |
| Investment Allocation | 54.1% in domestic equities, 15.35% in debt, 7.98% in government securities, 7.37% in low-risk securities |
| Exit Load | 1% for units in excess of 10% of the investment, if redeemed within 12 months |
What You'll Learn
The fund's investment strategy
The Nippon India Multi Asset Allocation Fund seeks long-term capital growth by investing in equity and equity-related securities, debt and money market instruments, and exchange-traded commodity derivatives, gold and silver ETFs as permitted by SEBI from time to time. The fund has been in existence since August 2020 and has delivered average annual returns of 21.02% since its inception.
The fund's top 5 holdings as of September 2024 were in iShares MSCI World ETF, Nippon India ETF Gold BeES, GOI, ICICI Bank Ltd., and Infosys Ltd. The fund's equity portion is invested in a variety of sectors, with the Financial, Services, Capital Goods, Energy, and Healthcare sectors receiving the majority of the allocations.
The fund has an expense ratio of 0.3%, which is lower than what most other Multi Asset Allocation funds charge. The fund has an exit load of 1% for units in excess of 10% of the investment if redeemed within 12 months.
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Historical performance
The Nippon India Multi Asset Fund has shown strong historical performance, with a consistent track record of generating returns. As of October 2024, the fund has delivered average annual returns of 18.52% to 18.53% since its inception in January 2013. This means that the fund has doubled the money invested every 3 years. The fund's 1-year returns as of October 2024 are also impressive at 46.08%.
The fund has outperformed its peers in the Multi Cap category over the last 5 years, demonstrating its ability to deliver consistent returns over the long term. It has also been ranked highly for its consistency of returns, with a rating of 4.5 out of 5.
When compared to other funds in its category, the Nippon India Multi Asset Fund has shown higher outperformance against its benchmark, with a 10.08 vs. 2.99 rating. However, it has lower risk-adjusted returns, with a Sharpe Ratio of 1.62 vs. 3.62. The fund is also more sensitive to market changes, with a Beta of 0.9 vs. 0.49, and has shown more volatile performance, with a Standard Deviation of 12.96 vs. 4.41.
The fund's performance in the last 3 months, 6 months, and 10 years has been positive, but the specific return percentages were not disclosed. The fund's 3-year returns as of October 2024 are 106.20%, and since its launch, the returns are 642.38%.
It's important to note that past performance does not guarantee future results, and mutual funds are subject to market risk. Investors should carefully consider their risk appetite, investment horizon, and objectives before making any investment decisions.
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Annual fees
When investing in the Nippon India Multi Asset Fund, it's important to consider the annual fees associated with managing your money. These fees are typically referred to as the expense ratio and are charged by the fund company to cover their management expenses. The expense ratio is a percentage of your Assets Under Management (AUM) and is automatically deducted from your investment returns, so you don't have to pay it explicitly. For example, if you invest 10,000 rupees and the expense ratio is 2%, you will have paid 200 rupees in fees.
The Nippon India Multi Asset Fund has an expense ratio of 0.3%, which is considered relatively low compared to other funds in its category. This is beneficial for investors because a lower expense ratio results in higher returns. The fund's low expense ratio can be attributed to its direct plan nature, where investors do not need to pay additional fees or commissions to a broker or distributor.
In addition to the expense ratio, investors should also be aware of the exit load associated with the fund. The Nippon India Multi Asset Fund charges an exit load of 1% for units in excess of 10% of the investment if redeemed within 12 months. This means that if you decide to withdraw your investment within the first year, you will incur a 1% fee on the portion of your investment that exceeds 10%.
It's important to carefully consider the fees associated with any investment before making a decision. While the Nippon India Multi Asset Fund offers a relatively low expense ratio, the exit load is something to keep in mind if you're considering early withdrawal.
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Risk analysis
Volatility
The Nippon India Multi Asset Allocation Fund has a higher standard deviation than most other funds in its category, indicating that its returns have been more volatile. This means that the fund's performance has been less predictable, and there is a higher chance of negative returns on your investment.
Sensitivity to Market Changes
The fund has a beta value of 0.71, which is higher than that of its peers. This suggests that the fund is more sensitive to market changes and tends to be more volatile than the market.
Risk-Adjusted Returns
The fund's Sharpe ratio is 1.41, which is lower than the category average of 2.5. This indicates that the fund has delivered poor risk-adjusted returns relative to its category.
Manager Skill
The fund's alpha is 5.98, which is significantly higher than the category average of 2.7. This suggests that the fund manager has a higher level of skill in generating returns beyond the market performance.
Credit Quality of Borrowers
The debt portion of the fund has been invested in instruments with a low credit rating, indicating that the quality of borrowers is not high. This suggests that the fund has lent to borrowers who may pose a higher risk of default.
Overall Risk Assessment
While the fund has generated solid returns, its consistency in generating returns is not strong. The fund's high volatility and sensitivity to market changes may result in a higher risk of negative returns. The fund's risk-adjusted returns are also poor compared to its category. Therefore, this fund may be suitable for investors who are comfortable with taking on higher levels of risk and can tolerate periods of low returns.
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How to invest
Investing in the Nippon India Multi-Asset Fund can be done in a few simple steps. Here is a detailed guide on how to get started:
Understanding the Fund:
- The Nippon India Multi-Asset Fund is a mutual fund scheme offered by Nippon India Mutual Fund. It aims to provide long-term capital growth by investing in a variety of assets, including equity, debt, and Exchange-Traded Commodity Derivatives (such as gold and silver).
- This fund has been in existence for a few years and has provided decent average annual returns since its inception. For example, the Nippon India Multi-Asset Allocation Fund has delivered average annual returns of 20.76% since its launch in 2020.
Evaluating Risk and Returns:
- When considering investing in any mutual fund, it is essential to assess the level of risk and the potential returns. The Nippon India Multi-Asset Fund has provided average annual returns of around 20%, but it is important to note that past performance does not guarantee future results.
- The fund's risk-adjusted returns are relatively poor compared to other funds in its category, as indicated by a lower Sharpe Ratio. This means that the fund may not provide the best returns for the amount of risk taken.
Expense Ratio:
The expense ratio of a mutual fund is the annual fee charged by the fund company for managing your investments. The Nippon India Multi-Asset Fund has a relatively low expense ratio of 0.3% for its direct plan, which is advantageous for investors as it leaves more of the returns for them.
Investment Platforms:
Investing in the Nippon India Multi-Asset Fund can be done through various investment platforms, such as ET Money. ET Money offers a paperless and fast investment process.
Investment Process:
- On the chosen investment platform, such as ET Money, you will typically need to provide your email address and select the investment type (one-time or SIP).
- Enter the investment amount and provide additional details, including your bank account information.
- Confirm your investment, and your SIP or one-time investment will be processed.
Redemption Process:
If you need to redeem your investments, you can do so through the investment platform or the fund house website. For example, if you invested through ET Money, you can log in to the app, go to the investment section, and submit a redemption request.
Disclaimer:
Mutual funds are subject to market risk. It is essential to carefully read all scheme-related documents before investing.
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Frequently asked questions
The Nippon India Multi Asset Fund is a mutual fund that invests in at least three asset classes, with at least 10% in each. It has a mix of equity, debt, and gold investments.
You can invest in the Nippon India Multi Asset Fund through a mutual fund broker or distributor. You don't need to pay any additional fees, but there is an expense ratio that is charged by the fund.
The expense ratio for the Nippon India Multi Asset Fund is 0.3%, which is lower than what most other Multi Asset Allocation funds charge.
The fund has delivered average annual returns of 20.76% since its launch in August 2020. It has doubled the money invested every 4 years.
The NAV of the Nippon India Multi Asset Fund as of October 14, 2024, was 21.81. The NAV changes daily and can be calculated by taking the current value of the fund's holdings, subtracting expenses, and dividing by the number of units issued.
