Arbitrage funds recorded net inflows of ₹3,789.02 crore during the month, marginally higher than multi-asset allocation funds.
The multi-asset allocation category requires funds to invest in at least three asset classes, with a minimum allocation of 10% to each. The asset classes can include equity, debt and commodities such as gold and silver.
The category has also delivered double-digit annualised returns across several schemes over a three-year period.
The Nippon Multi Asset Allocation Fund, for example, has given an 18.50% CAGR return over a 3 year period and leads the category. Similar funds from the house of White Oak Capital, SBI and ICICI Prudential have clocked in 3 year returns of 16.70%, 14.80% and 14.10% respectively.
Multi-asset allocation funds invest across asset classes rather than being focused on equities or fixed income alone. The allocation between these asset classes can vary from one scheme to another, depending on the fund’s investment strategy and portfolio positioning.
The August inflow data comes amid continued investor flows into hybrid mutual fund categories. Hybrid funds combine two or more asset classes within a single scheme, with different categories having prescribed allocation requirements.Multi-asset allocation funds can therefore provide investors with exposure to multiple asset classes through a single mutual fund scheme. However, returns can differ significantly across schemes depending on their asset allocation, market conditions and fund management strategy.
The three-year return figures are historical returns and do not indicate future performance.