Mutual Funds: Shriram AMC's New Fund To Give Inflation-Beating Returns, LTCG Benefits; SIPs Begin At Rs 1,000

Shriram Asset Management Company will be launching a new fund scheme namely "Shriram Multi Asset Allocation Fund" on Friday which is aimed at offering long-term inflation-adjusted wealth creation. Also, the new MF will offer Long Term Capital Gains tax (LTCG) benefits. Investment in the scheme can start with a lumpsum of Rs 5,000, while SIPs can begin with as minimum as Rs 1,000 per month or Rs 3,000 per quarter. There is also no lock-in period under the new MF.

The new fund offer will open on August 18 and will close on September 1, 2023.

As per the statement, this new fund aims to offer long-term inflation-adjusted wealth creation through exposure to multiple assets such as equity, debt, and gold/silver ETFs.

Kartik L Jain, MD & CEO, of Shriram Asset Management Company said, "Analysis of the last five years indicates that the category of Multi Asset Allocation Funds has shown lesser volatility with equity-like returns; hence this is a good option for goal planning. The exposure to gold also gives us a hedge against market volatility, especially during crisis periods and hence reduces the drawdown (fall from the peak) and gives a quicker recovery back to the earlier level."

Explaining in detail about the new scheme, Kartik highlighted that the Shriram Multi Asset Allocation Fund has a two-tier approach to delivering superior risk-adjusted returns. Firstly, its 'risk parity' approach between equity/debt/gold aims to minimise volatility and maximise returns, thereby giving better returns to the investor. Secondly, for the equity allocation, our proprietary Enhanced Quantamental Investment (EQI) model uses an integrated combination of quant and fundamental analysis to create a risk-adjusted equity portfolio that aims to deliver consistent alpha (returns above the benchmark).

Also, Shriram AMC uses three factors: low volatility (steady returns), momentum (increasing returns) and low valuation (at the right price) which has shown very positive results in both back testing as well as forward testing.

"We believe this one fund will appeal well to our investors," he added.

Here are the key highlights of the new scheme:

Investment Options:

Investors can regularly invest in this fund through Systematic Investment Plans (SIP), top-ups or Systematic Transfer Plans (STP) from liquid or overnight funds to meet their financial and family goals. The minimum investment amount for lumpsum is ₹5,000 while for SIPs it is ₹1,000 per month or ₹3,000 per quarter. There is no lock-in period involved.

The fund offers the investor the benefit of Long Term Capital Gains tax (LTCG) @10% (plus surcharge and cess) if they cross ₹1 lakh of capital gains in a fiscal year. If an investor buys/sells equity, debt, and gold separately to rebalance their asset allocation, they might face capital gains tax with each transaction. When the fund manager transacts within the scheme, there is no capital gains tax on the scheme. These two aspects make this fund a tax-efficient investment option for investors.

Fund Allocation:

Shriram AMC's proprietary Enhanced Quantamental Investment (EQI) model. The model relies on statistical data to make the right investment decisions for better fund performance while integrating quant as well as fundamental inputs for portfolio construction. The minimum allocation of 65% to equities allows investors in this fund to benefit from Long Term Capital Gains tax of 10%. The fund would also allocate 10% to 25% of funds in high quality (AAA) Short to Medium term debt, preferably in government and government-backed securities to avoid any credit risk; 10% to 25% in gold/silver ETFs, with the option up to 10% in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Last year, the Shriram Group re-energized its mutual fund business by bringing in US-based Mission1 Investments LLC as its strategic partner.

It added, that with this, Shriram AMC has diversified its product portfolio, bringing relevant and differentiated investment solutions to its customers. The AMC is focusing on 'Performance, Products and Placement' to set the foundation for sustainable growth.

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