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Bajaj Finserv Multi Asset Allocation Fund: Optimising Growth Potential with Dividend-Yield Investing

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Bajaj Finserv Asset Management Ltd has yet another unique mutual fund offering for its investors – the Bajaj Finserv Multi Asset Allocation Fund with Growth and Dividend Payout.

The fund is equipped with growth and dividend boosters, following a dividend-yield investing strategy that seeks to optimise return potential in the long term.

This article tells you more about what’s different about Bajaj Finserv Multi Asset Allocation Fund and who can consider investing in it.

About multi asset allocation fund

Multi asset allocation fund is a type of hybrid mutual fund that invests in at least three asset classes, with a minimum allocation of 10% to each. The fund is dynamically managed, which means that fund managers can flexibly alter the asset allocation pattern in response to market movements.

The Bajaj Finserv Multi Asset Allocation Fund will invest in equity, debt, and commodities. It may also allocate a part of its portfolio to units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). For a detailed scheme information,click here

Dividend-yield investing

A dividend is a payment made by a company to its shareholders, usually in the form of cash or additional shares of stock. It represents a portion of the company's profits that is distributed to its shareholders.

Dividend yield represents the annual dividend a company pays relative to its stock price and is calculated by dividing the annual dividend per share by the current stock price.

In its dividend-yield investing approach, Bajaj Finserv Multi Asset Allocation Fund will focus on stocks or securities that have typically offered higher dividend yields than the Nifty 50 index. These dividends will be reinvested to purchase additional units. This, in turn, will increase opportunities for compounding growth.

Compounding is the process where the potential returns on an investment are reinvested to generate additional earnings over time. This can potentially have a snowball effect and result in significant growth over the long term.

The fund will allocate 35% to 80% of its portfolio to equity. While crafting the portfolio, fund managers will also focus on companies with healthy balance sheets, stable business models and a track record of consistent performance. This may help create a portfolio that is relatively resilient to volatility and with optimised long-term growth potential.

The equity portion will also follow a multi-cap, multi-sectoral and multi-theme approach. This can further optimise return potential while mitigating against the risk of over-concentration in one segment.

Hedging against volatility

The scheme will also allocate 10% to 55% of its portfolio to debt securities and money market instruments to add relative stability to the portfolio. The debt segment of the portfolio will follow a dynamic duration management strategy, which involves adjusting the underlying duration of the securities in the portfolio in response to interest rate changes. This strategy can mitigate risk and leverage various interest rate environments.

The commodities segment will comprise 10% to 55% of the portfolio and will provide exposure to gold ETFs, silver ETFs, and exchange-traded commodity derivatives. This part of the portfolio can potentially act as a hedge against the volatility of equity. It may also contribute to the portfolio’s growth potential in certain market conditions.

The fund may also allocate 0% to 10% to REITs/InvITs.

The portfolio will be dynamically managed, meaning that fund managers can flexibly alter the asset allocation pattern in response to market movements. However, under normal circumstances, the scheme will seek to allocate more than 65% of its assets to equity to optimise growth potential and benefit from equity taxation.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.