Kotak Mutual Fund on August 31, 2023 launched the Kotak Multi Asset Allocation Fund. This is an open-ended scheme that will invest in different asset classes.
The new fund offer (NFO) opened on August 31, 2023 and will close on September 14, 2023. The scheme will again re-open for continuous sale and repurchase within five business days from the date of allotment of units or before October 3, 2023, Kotak Mahindra Asset Management Company (AMC) announced in a press release.
The minimum investment amount during the NFO is Rs. 5,000 per plan and/or option, and in multiples of Re 1.
According to Kotak Mutual Fund, the fund will invest in equities, debt instruments, commodities, exchange-traded funds (ETFs), overseas instruments, real estate investment trusts (REITs), and infrastructure investment trusts (InvITs).
Multi asset allocation funds are designed to distribute investments across different asset classes. According to the Securities and Exchange Board of India (Sebi) guidelines, these funds are categorised as hybrid funds that are required to allocate at least 10 per cent to three distinct categories, such as equity, debt, gold or commodities, or REITs and/or InvITs units.
These funds also offer flexibility to adapt to market conditions. They can capitalise on market uptrends by investing in profitable asset classes during a bull run, or prioritise stability during market downturns by focusing on less volatile options.
Says Devender Singhal, executive vice president, Kotak Mahindra AMC: “No single asset dictates the outcome. So, we endeavour to tap into the potential of each asset class. We are not just selecting securities, we are building a diversified portfolio aimed at reasonable risk-adjusted returns with moderated volatility.”
The fund will increase net equity allocation when the market is in a downturn and decrease it when the market is expensive. However, the fund will ensure a minimum 65 per cent allocation to equities to take advantage of favourable equity taxation policies, Singhal added.
The exit load is nil for up to 30 per cent redemption or switch of units within a year. If it exceeds 30 per cent in one year, the fund will charge an exit load of 1 per cent. After one year, the exit load is nil.
According to data from the Association of Mutual Funds in India (Amfi), on average, the nine funds in this category have delivered returns of 14.51 per cent in the past year and 17.38 per cent over the past three years.
