The new 360 One Multi Asset Allocation Fund turns conventional wisdom on its head in terms of its approach to asset allocation.
Most MAAFs start with a premise of maximizing equity allocation in the quest for higher returns and leave smaller allocations for debt and precious metals.
This new fund is debt+ in its orientation: it reserves the highest allocation for debt (25-50%) followed by precious metals (25-40%) and then equity (15-35%).
The aim is to provide inflation beating returns over time with lower volatility. Back testing suggests a 50-25-25 (debt-gold-equity) model tends to capture upto 80% of the upside from equity while limiting drawdowns to a third.
The AMC’s specialist commodities desk will take tactical calls between gold and silver based on the gold-silver ratio (GSR) and other macro parameters. Initial allocation to precious metals will likely be 35%,with 60% of that going to silver and the balance to gold, as the GSR currently favours silver over gold.
Expect equity in the initial portfolio to be in the 20-25% range. This portion will be managed akin to a flexicap strategy.
Expect debt to be in the 40%+ range. This portion will be managed dynamically with duration ranging between 1 and 4.5 yrs. Credits will be AA and above.
Raghav says there is a paucity of debt+ multi asset funds in the industry and this new fund addresses that gap.
The more conservative orientation of this MAAF makes it a good retirement income solution with SWPs set on the corpus to provide regular cashflows even as it seeks to fight inflation and preserve the purchasing power of the investor’s money.
A conservative multi asset inflation fighter lends itself to many use cases – Raghav asks distributors to create tailored solutions from this fund to meet their clients’ unique needs.