NFO alert - LIC Mutual Fund launches LIC MF Multi Asset Allocation Fund; Should you invest?

LIC MF Multi Asset Allocation Fund provides investors with a balanced investment opportunity across equity, debt and gold.

In a move to cater to the growing demand for diversified investment solutions, LIC Mutual Fund has announced the launch of the LIC MF Multi Asset Allocation Fund. This open-ended scheme will allocate investments across equity, debt, and gold, offering investors a balanced and diversified approach to wealth creation.

The New Fund Offer (NFO) opened on January 24, 2025, and will close on February 7, 2025, with the scheme reopening for continuous sales and repurchase from February 18, 2025.

Features of the Fund

• Diversification: By investing across equities, debt instruments, and gold ETFs, the fund aims to reduce the risk concentration, providing a balanced investment approach.
• Asset Allocation: The fund will typically allocate 65 per cent to equities, 25 per cent to debt, and 10 per cent to gold, based on the benchmark composition.
• Market Exposure: Offers exposure to both growth (via equities) and stability (through debt and commodities), potentially offering a smoother investment journey through market cycles.

Fund Details

• NFO Period: Open from January 24, 2025 to February 7, 2025.
• Reopening Date: For ongoing transactions from February 18, 2025.
• Benchmark: A custom index comprising 65 per cent Nifty 500 TRI, 25 per cent Nifty Composite Debt Index, and 10 per cent domestic gold price.
• Fund Managers: Nikhil Rungta, Sumit Bhatnagar, and Pratik Shroff.

Management Comments
R.K. Jha, Managing Director & CEO, LIC Mutual Fund Asset Management Ltd, highlighted the growing popularity of hybrid mutual funds: "The Multi-Asset Allocation Funds are increasingly getting popular as they reduce concentration risks and ensure better asset diversification. According to AMFI, hybrid mutual funds saw a 27 per cent increase in assets under management in 2024, rising from Rs 6.90 lakh crore in January 2024 to Rs 8.77 lakh crore in December 2024. Our new fund caters to this evident investor inclination towards hybrid solutions.”

Nikhil Rungta, Co-Chief Investment Officer - Equity, LIC Mutual Fund Asset Management Ltd, emphasized the scheme’s balanced approach: "A Multi-Asset Allocation Fund combines the growth potential of equities, the income stability of debt, and the resilience of commodities. It is a well-rounded solution for investors looking for lower volatility compared to pure equity schemes while capitalizing on market opportunities. With a bullish long-term market outlook, this fund is designed to help investors navigate volatility effectively.”

Should You Invest?

Pros

• Diversification: The fund offers a broad exposure across asset classes, potentially reducing overall portfolio risk.
• Volatility Management: The inclusion of debt and gold can stabilize returns during equity market downturns.
• Growth Potential: With a significant allocation to equities, there's room for substantial growth over the long term.

Cons

• Performance Dependency: The fund's performance will depend on how well the fund managers balance and adjust asset allocation in response to market conditions.
• Cost: Multi-asset funds might have higher expense ratios due to the complexities of managing different asset classes.

Conclusion
For investors who are looking for a one-stop solution for diversification, this fund could be appealing. It's particularly suitable for those with a moderate risk appetite, aiming for long-term capital growth without the sharp swings of pure equity investments.

However, as with any investment, potential investors should consider their financial goals, risk tolerance, and investment horizon before deciding to invest. Consulting with a financial advisor could provide further personalised guidance.

Disclaimer: The article is for informational purposes only and not investment advice.