In a world where asset allocation models are getting increasingly complex, Nippon India Multi Asset Fund’s stable allocation model stands out – not just for its simplicity but equally for its consistent top quartile performance across 1 and 3 yr timeframes.
The fund allocates in fixed proportions, 50% to domestic equity, 20% to international equity, 15% to debt and 15% to commodities. The fund’s outperformance has been driven substantially by stock and sector picks in its 50% domestic equity component.
Due to restrictions in overseas investment, incremental flows could not maintain 20% allocation to the international equity index ETF. Consequently, allocation to commodities (gold and silver) is going up marginally, which may well turn out to be a blessing in disguise.
Ashutosh believes in buying on evidence of earnings growth rather than a hope for earnings upticks. This approach has seen him remain overweight on industrials/manufacturing and underweight on consumption, though he is selectively adding positions in consumer durables.
He has moved from negative to neutral on IT and is keenly looking forward to more evidence on earnings rebound to consider going overweight.
Within financials, he advises caution on capital market related businesses where valuations have shot up and prefers niche non-consumer facing NBFCs in the power and industrials spaces. Insurance can be a dark horse as it comes out of an extended period of consolidation driven by regulatory concerns.