Thread by @IamMisterBond

There seems to be influx of Multi Asset NFOs.

@MotilalOswalAMC came with Debt oriented version and now @NipponIndiaMF is coming out with Equity version.

Is this another fad or is there a genuine, long lasting story in this category and why?

My take on this thru this Thread.

Many asset classes have negative correlations: like Gold does well when Equities underperform. Similarly, debt performs in Contracting economies and Equity in expansionary economies.

Unfortunately, Investors do not do proper Asset allocation due to their own biases like Trend Chasing, Familiarity, Self Attribution biases and more.

How many know that over past decade Gold was best performing in 5 years, Equity in 3 years and Debt in 2 years?

Those who missed investing in Gold and chased only Equity would have underperformed.

Also, they do not realise that most of the Asset Classes like Equity (Domestic & Global), Gold, Debt have all gone thru Consolidation phases of 10-20 years; delivering no returns during such periods.

Also, post such consolidation periods, breakouts are equally dramatic.

One will not be able to time when an asset class will break out and start performing post such long consolidation periods.

Investors lose more money during Consolidation than during Correction phases of these asset classes. Hence, they need to be invested in Multi Assets.

It is like a fist is more powerful than individual fingers; similarly Multi Assets become stronger than single asset exposures.

Also, global equities not only become Geographical diversification but currency diversification as well.

Currency appreciation also becomes a contributor to returns of Investors.

To conclude, I believe that this is not a fad but missed opportunities by Investors over last several decades.

It shows in Investor exposure of 18-20,000 crs in Gold & Global Equity vs 25 lac crs of MF AUMs.

Showing under penetration in this category.