Should you invest in Canara Robeco Multi Asset Allocation Fund?

The new fund offer for the scheme will close on May 23, 2025.

Canara Robeco Mutual Fund has launched a multi-asset allocation fund that will look to generate alpha when markets are doing well and reduce downside risk during downturns.

The Canara Robeco Multi Asset Allocation Fund will invest across asset classes in equity, debt, and gold and silver ETFs.

What’s on offer?

The active multi-asset allocation strategy aims to navigate all market conditions. The fund will focus on periodic optimisation of asset classes in response to changing economic factors, earning momentum, market valuation, and equity risk premium, facilitating portfolio alignment.

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The hybrid fund will allocate 65-80 percent of the total assets towards equity and equity instruments, 10-25 percent towards gold and silver ETFs, and 10-25 percent towards debt and money market instruments. The scheme may also invest in REITs and InvITs.

The Canara Robeco Multi Asset Allocation Fund will be benchmarked against 65 percent BSE 200 TRI + 20 percent NIFTY Short Duration Debt Index + 10 percent Domestic Price of Gold + 5 percent Domestic Price of Silver.

Amit Kadam, Fund Manager – Equities, Ennette Fernandes, Fund Manager – Equities and Kunal Jain, Fund Manager – Fixed Income, will manage the fund.

How will the portfolio be constructed?

“We will dynamically balance the portfolio with the changes in the underlying economic and market cycles. The allocation will be based on our Internal Research Framework,” said Shridatta Bhandwaldar, Head Equities, Canara Robeco Mutual Fund.

The equity allocation will be decided by the fund’s internal research on parameters such as economy, earnings and valuation, which will guide whether to increase or decrease net equity allocation within the 30-80 percent range.

“When these indicators are trending positive, we will move the equity allocation towards 80 percent to enhance the returns, and when these indicators are trending negative, we will reduce the equity allocation towards 30 percent to avoid drawdown,” said Bhandwaldar.

In asset allocation, stock selection is not given so much importance, but the equity portfolio has been designed to be very sharp and well diversified, with a limited number of high-conviction companies.

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“We will invest in only those companies which are either leaders in their sectors, having a long track record of growing across market cycles, or challengers within sectors growing ahead of the market by gaining market share, or some emerging themes which have significant high-growth opportunities,” said Bhandwaldar.

What should investors do?

Portfolios and mutual funds have taken a hit, and global volatility, fuelled by geopolitical risks, the US tariff war, and the India-Pakistan tensions, has only added to investor confusion.

In this uncertain environment, multi-asset allocation funds (MAAFs) are emerging as a compelling solution.

By combining equity, debt, and gold, they provide inherent diversification that manages volatility and introduces stability. With their dynamic capability to reallocate in accordance with market cycles, they also balance risk and potential.

One of the major benefits is the lack of tax implications when switching between asset classes within the fund, which increases after-tax efficiency.

“With over 26 MAAFs available, Indian investors have wide choices to match their risk profiles. While no fund is free from allocation or market risks, MAAFs provide the necessary agility and balance. Before choosing a fund, investors need to evaluate their risk tolerance, investment horizon, and tax implications, and invest in schemes that have a steady asset allocation approach and a sound track record,” said Trivesh, Chief Operating Officer, Tradejini.

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According to Vinod Jhaveri, Analyst, Pure Technicals, allocation to different asset classes performs different roles as outperformance or underperformance of each asset class is different in different markets and economic conditions.

“It makes sense to invest in a multi-asset allocation fund as it gives better risk-adjusted returns and has limited downside risks,” said Jhaveri.

Multi-asset allocation funds are suitable for cautious investors who want to rely on fund managers to make asset allocation decisions.

"The current equity valuations and short term uncertainty around growth makes asset allocation funds an interesting option for such investors. Given the negative correlation between equities and gold, such funds could also help reduce the volatility associated with equities. However, there are several established funds in this category with a solid track record, which investors may consider as alternatives to a new fund," said Nilesh D Naik, Head of Investment Products, Share.Market (PhonePe Wealth).