Tata Mutual Fund has launched the ‘Tata Multi Asset Opportunities Fund’ for those who want to curb risk by diversifying investment
- The new fund offer opened on Feb 14 will close on Feb 28.
- The fund will invest in everything from share market to debt to exchange-traded commodities.
- For example, if the share market is going down and copper prices are rising, it will keep the investment in good stead.
The diversification in investments will adjust the risk and offer better returns, according to Tata Asset Management. For example, if the share market is going down and copper prices are rising, it will keep the investment in good stead.
25% of the investors’ money will be invested in exchange-traded commodity derivatives, where a maximum of one in every ten rupees can be invested in any one commodity. “"Negative correlation between different assets ensures not all investments fail at the same time giving stability to the portfolio,” Chief Investment Officer Rahul Singh said.
What are commodity derivatives?
Derivatives allow investors to profit from the trade without actually possessing the commodity. The buyer of a derivatives contract, essentially, buys the right to exchange a commodity at a certain price sometime in the future date.
What is an exchange-traded fund?
An exchange-traded fund (ETF) is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, like the Nifty or Bank Nifty, although they can invest in any number of industry sectors, the Investopedia explains.
They are in many ways similar to mutual funds; however, they are listed on exchanges and ETF shares trade throughout the day just like ordinary stock.
'Tata Multi Asset Opportunities Fund' will invest in such exchange-traded funds that invest in commodity derivatives.
The scheme presents two types of investment plans namely ‘Regular Plan’ (for applications routed through distributors) and ‘Direct Plan’ (for direct applications). Both these categories again give two options each namely ‘Growth Option’ and ‘Dividend Option’.
If you do not tick the options you find on the application form, your units will be allotted by default under the ‘Direct Plan – Growth Option’.
If the dividend amount receivable by an investor is less than ₹500, it will compulsorily reinvested in the same way as before. Whereas the distribution of dividend (more than ₹500) will be at the discretion of the Trustees.
There is no entry load (a charge for investing) but the investor will have to pay an exit charge of 1% of the net asset value (NAV) if he/she chooses to pull money out or switch to another fund within the first year.
Minimum redemption amount will be ₹500 or 50 units or account balance whichever is lower. There are no guaranteed returns.
best sip mutual funds for 2020