360 ONE Multi Asset Allocation Fund NFO: Power of asset allocation in volatile times

The VUCA World: Current market situation

Current markets are shaped by forces beyond traditional economic cycles. The VUCA factor viz. Volatility, Uncertainty, Complexity and Ambiguity are the forces affecting markets frequently. Asset allocation can provide stability to your portfolio in uncertain market conditions. In this article, we will review the 360 ONE Multi Asset Allocation Fund which opens its NFO on 30^th July 2025, and will remain open for subscription till 13^th August 2025.

Investments in VUCA era: Difficult to predict winners

Different asset classes outperform/underperform each other in different market / economic conditions (see the chart below), making it impossible to predict the next winner. Different asset classes perform different roles in your portfolio, e.g. equity provides capital appreciation, debt provides portfolio stability, gold provides inflation protection, etc. You can see that debt is much more stable than equity. Gold and equity are usually counter cyclical to each other, i.e. gold outperforms when equity underperforms and vice versa. There is also a low correlation between domestic equities and international equities' returns. Combining these asset classes may lead to relatively stable portfolio returns.

Source: National Stock Exchange, MCX, Advisorkhoj Research, as on 30^th June 2025. Nifty 50 TRI is used as a proxy for equity as an asset class, Nifty 10-year benchmark G-Sec Index is used as proxy for fixed income as an asset class, spot price of Gold and Silver (in MCX) is used as proxy for Gold and Silver.

What is Multi Asset Allocation Fund?

Multi-Asset Allocation funds are hybrid mutual fund schemes which invest in 3 or more asset classes. According to SEBI regulations, multi-asset allocation funds must invest a minimum of 10% each in at least 3 asset classes. Apart from the two most popular asset classes, debt and equity, these schemes invest in asset classes like commodities (e.g. gold, silver), international equities, real estate investment trusts (REIT), infrastructure investment trusts (InvITs), etc. The fund manager decides the proportional allocation to each asset class based on the market conditions to balance risks and returns.

Why invest in Multi Asset Allocation Funds?

• Asset classes have low/negative correlation: Investing in asset classes with low or negative correlation helps reduce portfolio volatility. Debt has low correlation with all asset classes making it a good stabilizer. Equity has a low correlation with Gold and Silver, making them useful diversifiers. (See the table showing the correlation between asset classes)
  
  

  

  Source: 360 ONE AMC, data as on 30^th June 2025



• Reasonable returns with relatively low risk: The chart below shows the 2-year rolling returns and the Volatility (Standard deviation) of Debt and equity Vs the Multi Asset Allocation funds category. You will notice that although the Multi Asset allocation fund has given similar returns to the Equity returns, the volatility of the former is a lot less than Equity, signifying that in volatile times, the multi asset allocation strategy is a more time-tested strategy to minimize risks.
  
  

  

  Source: 360 ONE AMC, data as on 30^th June 2025



• More instances of delivering 7% returns: The chart below shows the instances when the different asset classes offered a return of more than 7% during the period 31^st December 2008 to 30^th June 2025. Notice that like the debt class, the multi asset portfolio did not give any negative returns during this period. Also, the multi asset category gave above 7% returns 80.4% of the times as compared to debt (67.2%) and equity (67.6%).
  
  

  

  Source: 360 ONE AMC, data as on 30^th June 2025



• Lower drawdowns during uncertainties: Historically, the multi- asset portfolio has fallen less than the broader markets during market drawdowns.
  
  

  

  Source: 360 ONE AMC, data as on 31^st March 2025. Multi asset portfolio is constructed using 25% BSE 500 TRI, 45% Nifty Composite debt index and 30% Gold & Silver Prices.



• Outperformance during flat markets: Historically, the Multi Asset portfolio has delivered stable, positive returns providing resilience through market cycles. (see the chart below)
  
  

  

  Source: 360 ONE AMC, data as on 31^st March 2025. Equity represented by BSE 200 TRI, Multi asset portfolio is constructed using 25% BSE 500 TRI, 45% nifty Composite debt index and 30% Gold & Silver Prices.

Why is investing in Multi Asset fund desirable now?

The Indian market has also been volatile this year due to rapid geopolitical developments but bounced back after hostilities in the Middle East ceased. However, volatility hit the markets again due to global trade uncertainties, impact of tariffs / counter-tariffs, EU sanctions on Russian oil etc. Current market conditions where interest rates are falling, precious metals are at record highs and there is uncertainty about global macro-economic outlook, etc. can leave investors confused. Despite all the volatile situations, India continues to be one of the fastest growing economies in the world. Lower inflation and fiscal consolidation are likely to be favourable for long term debt exposure. AAA and AA corporate bond spreads are stable, providing a chance to earn incremental returns over G-Secs, without excessive credit risk. The uncertain geopolitical scenario is driving the demand for precious metals as safe haven investments. Not only this, the commercial appeal of Silver in the green energy space is likely to provide tailwinds. In such situations, investors can minimise their susceptibility to volatility through diversification across various asset classes.

The 360 ONE Multi Asset Allocation Fund

The 360 ONE Multi Asset Allocation Fund aims to provide reasonable returns with lower risks by investing in multiple classes to provide long term growth with relative stability. (see graphic). The fund is managed by fund managers Mayur Patel ( President and Fund manager : Equity), Milan Mody ( Debt Portion), and Rahul Ketawat (Commodity portion).

Source: 360 ONE Product presentation. Please refer to SID for exact portfolio

Investment Framework & Portfolio Construct of 360 ONE Multi Asset Allocation Fund

The fund managers follow a dynamic asset allocation strategy depending on prevailing market conditions.

• Debt Allocation Strategy: For debt allocation, the SLR framework is followed that allude consideration on Safety, Liquidity and returns.
  
  

  



• Equity Allocation Strategy: The SCDV framework is followed for investment into Equity with no sector or market cap bias.


• Secular: The core portfolio consists of companies growing profits and delivering ROE upwards of 15% fairly consistently. The fund managers aim to be always overweight in this quadrant.


• Cyclical: This quadrant has companies that are dependent on economic cycles undergoing cycles of high profit growth in an economic upcycle. ROEs of these companies tend to be lower over long term due to the higher capital intensity. Hence, allocation to these companies is kept tactical.


• Defensives: The fund managers also allocate tactically to companies with high ROE and robust cash flows, but modest growth over the long term.


• Value Traps: The companies that have struggled to generate ROE and profit of more than 15% over long tenures are underweight in the portfolio.
  
  

  

• Commodities Allocation Strategy: Investments in instruments like Exchange Trades Commodity Derivatives (ETCds) and Commodity ETFS (gold/silver) is done with a long-term investment approach pertaining to commodities fundamentals, demand-supply trends and macro factors for allocation to commodities. The short-term approach focuses on arbitrage opportunities, price corrections or event driven trades in the commodity markets. The strategic short-term allocation to gold and silver provides relatively steady returns having low correlation to debt or equity, helping to balance the portfolio.


• REITs and INVITs Allocation: Allocation to REITs and INVITs help capture growth through Real Estate Cycles and provides diversification. See the chart below that shows the growth of Nifty REITs and INVITs. The relatively stable returns from this category provides a hedge against inflation as the income is linked to the rent that is dependent on inflation.
  
  

  

  Source: 360 ONE Product presentation. Data as on 30^th June 2025.



• Taxation Facts: The 360 ONE Multi Asset Allocation Fund enjoys a hybrid taxation where capital gains on investments redeemed in less than 24 months are taxed as per the slab rate. Long term capital gains will be taxed at 12.5% after a holding period of 24 months.

Who should invest in the 360 ONE Multi Asset Allocation Fund NFO?

The fund may be suitable for investors who:

• Seek stability in volatile markets.


• Aim for better than debt returns while keeping volatility in check.


• Want to diversify across various asset classes.


• Look for investment for midterm to long term goals of goals 3-5+ years

Contact your Financial Planner or mutual Fund distributor to understand if the 360 ONE Multi Asset Allocation Fund is suitable for you.