Canara Robeco Multi Asset Allocation Fund NFO: Power of asset allocation

The Canara Robeco AMC is launching the Canara Robeco Multi Asset Allocation Fund NFO on May 9^th 2025. The NFO will close on 23^rd May 2025. The fund aims to harness the power of Multi Asset allocation strategy to earn capital appreciation for the investors with a long-term horizon. Asset allocation has been proven by studies to be the largest determinant of portfolio performance (91.5%), the other determinants being Security Selection (4.5%) and the selection of the timing of investment (1.8%). (Source: “Determinants of Portfolio Performance II: An Update” Research Report by Gary P Brinson, Brian D Singer and Gilbert L Beebower,)

In this article we will understand the features of the fund and the reasons why this fund may be a valuable addition to your mutual fund investment.

Why is asset allocation important?

• Various asset classes exhibit distinct returns between distinct market phases
  
  

  

  Source: Note – BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Gold returns, Price of Silver is considered to depict Silver returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns(F.I.).

  
  

  Note – Returns calculated are on absolute basis for the referred period and are rebased to 100. Disclaimer: Past performance may or may not be sustained in the future. Source: MFI Explorer, Bloomberg

  
  

  The data/statistics are given only to explain how different asset classes have varying levels of returns in different market phases. The above information should not be construed as any guarantee or indication of future results.



• Various asset classes exhibit distinct returns within similar market phases
  
  

  

  BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Gold returns, Price of Silver is considered to depict silver returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns(F.I.).

  
  

  Note – Returns calculated are on absolute basis for the referred period and are rebased to 100. Disclaimer: Past performance may or may not be sustained in the future. Source: MFI Explorer, Bloomberg

  
  

  The data/statistics are given only to explain how different asset classes have varying levels of returns in different market phases. The above information should not be construed as any guarantee or indication of future results

How does Multi Asset Allocation Strategy work?

• Asset Classes perform different roles: Different asset classes perform different roles in your portfolio, e.g. equity provides capital appreciation, debt provides portfolio stability, gold provides inflation protection, etc. Different asset classes outperform/underperform each other in different market / economic conditions. Multi Asset Allocation strategy makes use of the insight that allocating assets between various sectors helps to create a much more resilient portfolio that can weather market volatilities.
  
  

  

  Source: National Stock Exchange, MCX, Advisorkhoj Research, as on 31^st March 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 debt as an asset class, spot price of Gold (in MCX) is used as proxy for Gold and S&P 500 (in INR) is used as a proxy for international equities. Disclaimer: Past performance may or may not be sustained in the future.

What are Multi Asset Allocation Funds?

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?

• Consistent Performance: Multi Asset Allocation Funds show consistency across time frames. See the chart below that shows that the MAAF as a category was consistent in its performance in the last 10 calendar years (CY) as compared to other asset classes.
  
  

  

  Source: Canara Robeco AMC: Note – BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Gold returns, Price of Silver is considered to depict Silver returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns (F.I.).

  
  

  *MAAS (Multi Asset Allocation Strategy)= 65%* BSE 200 TRI + 20%*Nifty Short Duration Debt Index + 10%*Price Of Gold + 5%*Price Of Silver Source: MFI Explorer, Bloomberg. Note- Calendar Year Returns are point to point returns for calendar year; Data from 1^st Jan 2015 to 31^st Dec 2024; Disclaimer: Past performance may or may not be sustained in the future.



• Better Risk adjusted returns: Returns from various asset classes are prone to volatility in markets. Fixed income by nature is not as volatile but the returns from Fixed income is conservative compared to the other asset classes. Multi Asset Funds make a good balance between the returns and the risk associated with it in times of volatility. Equity gives it the boost of capital appreciation; debt offers stability and gold and silver helps in balancing the equity downtrends due to their negative corelation with Equity. See the figure below that shows how diversifying your portfolio with Multi Asset Allocation strategy offers better risk adjusted (data from 1^st Jan 2015 to 31^st Mar 2025) and may offer:
  
  
  1. a middle ground in managing volatility
  
  
  2. relatively lesser downside
  
  
  3. optimization of returns
  
  
  4. optimal Risk adjusted returns (see Sharpe ratio and beta in the illustration below)
  
  
  5. optimal returns next to equity (compare 15 Years CAGR of Equity Vs Multi Asset Allocation Strategy)
  
  

  

  Source: Canara Robeco AMC: Note – BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Gold returns, Price of Silver is considered to depict Silver returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns(F.I.).*MAAS (Multi Asset Allocation Strategy)= 65%* BSE 200 TRI + 20%*Nifty Short Duration Debt Index + 10%*Price Of Gold + 5%*Price Of Silver Source: MFI Explorer, Bloomberg. Note- Returns are 3 Year CAGR Returns as on Daily Rolling Basis; Data from 1^st Jan 2015 to 31^st Mar 2025.; Disclaimer: Past performance may or may not be sustained in the future.



• Limited downside risks: MAAS forms a middle ground for drawdowns of different asset classes, thus being relatively less volatile than equity but being inherently riskier than a pure debt portfolio. See the chart below that shows the drawdowns of various asset classes Vs the Multi Asset Allocation Strategy as a category.
  
  

  

  Source: Canara Robeco AMC. BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Gold returns, Price of Silver is considered to depict Silver returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns(F.I.).

  
  

  *MAAS (Multi Asset Allocation Strategy)= 65%* BSE 200 TRI + 20%*Nifty Short Duration Debt Index + 10%*Price Of Gold + 5%*Price Of Silver Source: MFI Explorer, Bloomberg. Note- Calendar Year Returns are on CAGR basis; Data from 1^st Jan 2015 to 31^st Mar 2025; Disclaimer: Past performance may or may not be sustained in the future



• Taxation: Another huge draw of the Multi Asset Allocation Funds is its equity taxation. Even though you get the benefit of diversification in your portfolio with various asset classes, the category is taxed as per equity at 12.5% for long term capital gains in excess of 1.25 lakhs for assets held for more than a year. On the other hand returns from pure Debt funds and commodities are taxed as per slab rates.

Canara Robeco Multi Asset Allocation Fund

The Canara Robeco Multi Asset Allocation Fund is an open-ended scheme investing in Equity & Equity related instruments, debt & money market instruments, Gold ETFs, and Silver ETFs. The fund is managed by Mr. Amit Kadam, Ms. Ennette Fernandes, and Mr. Kunal Jain. The benchmarks followed by the fund are 65% BSE 200 TRI + 20% NIFTY Short Duration Debt Index + 10% Domestic Price of Gold + 5% Domestic Price of Silver.

Canara Robeco Multi Asset Allocation Fund: Asset Allocation Strategy

The Canara Robeco Multi Asset Allocation Fund invests across Equity, debt and commodities based on the fund managers’ strategy in the market/economic situation and periodic rebalancing. The Fund will invest in a diversified High Conviction Portfolio consisting of “Leaders” with proven track record across market cycles which would provide strength and compounding to portfolio; as well as in “Emerging Companies” with improving market share to lend Alpha to the portfolio through superior earnings

Broadly speaking, the fund follows the following strategy:

• Equity portion: (65-80%): Gross equity exposure will be maintained at minimum 65% while the net equity exposure might be lower due to hedging (arbitrage positions). Equity Portion of the Fund would be a “Market Capitalization, Style & Sector Agnostic” with an endeavor to create a diversified portfolio spanning multiple sectors & market capitalizations. A combination of top-down and bottom-up approach of stock selection will be employed.


• Fixed Income: A robust and coherent Fixed Income Investment Process using a dynamic strategy is employed in choosing the fixed income instrument. This strategy will allow the fund manager to switch between short- and long-term bonds depending on the macro-economic and interest rate outlook. The flexibility to realign the portfolio according to interest rate movements, gives the investor an opportunity to capture the upside whilst likely reducing the downside impact. The flexible mandate may further help in bolstering the portfolio from market volatility. The fund managers aim for alpha generation by actively tracking spreads within yield curve / across yield curves to capture mis-pricings


• Gold and Silver: Allocation to Gold and Silver ETFs will be based on internal research and market outlook. U.S. 10 year and 1 year benchmark yield differentials will provide direction for allocation. A positive difference will invite a negative view on gold and silver and vice versa. Other factors that will influence the investment decisions into gold and silver will be geo-political events like currency fluctuations following Central bank’s policy action which encourages safe-haven investing. Also demand and supply mismatches in inventory and seasonal factors like weddings, festive seasons etc., will have an influence on the investment of gold and silver portfolio in the fund.

Apart from this the fund may also invest in Units issued by REITs and InvITs.

Source: Canara Robeco AMC

SWP facility

Through the Systematic Withdrawal Plan (SWP) facility you can withdraw a fixed amount every month or any other interval from your investments in a Canara Robeco Mutual Fund scheme.

The chart below shows the results of Rs 30,000 monthly SWP from a Rs 50 lakhs in a hypothetical Multi Asset Allocation portfolio comprising of 65% in equity (Nifty 50 TRI), 20% in debt (Nifty 10-year Benchmark G-Sec Index) and 15% in gold, over the last 10 years. You can see that, despite withdrawing Rs 36 lakhs from your investment of Rs 50 lakhs through monthly SWP, your capital would have grown to Rs 77 lakhs (as on 1^st April 2024). The relative stability provided by multi asset funds in volatile markets makes them suitable for SWP, since withdrawals during volatile market phases have relatively limited impact on fund value.

Source: Advisorkhoj Research, as 30^th April 2024

Why should you invest in Canara Robeco Multi Asset Allocation Fund?

1. A Fund investing across equity market capitalizations, fixed income instruments across different maturities while also having allocation to Gold and Silver ETFs


2. A combination of high conviction equity allocation, actively managed gold and silver ETFs exposure & dynamic fixed income portfolio suitable as a likely candidate for an all-weather portfolio


3. Active multi asset allocation strategy follows framework and aims to navigate all market conditions


4. Research based framework for periodic optimization of asset classes

Who should invest in Canara Robeco Multi Asset Allocation Fund?

1. Investors looking for diversification across asset classes.


2. Investors with a very high-risk appetite


3. Investors with a long-term investment horizon of 5 years and above.


4. Investors trying to moderate their participation in market rallies while mitigating potential losses

Consult your financial planner or a mutual fund distributor to understand how Canara Robeco Multi Asset Allocation Fund can align with your portfolio.