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Passive investing allows you to participate in the growth of the market without worrying about the variables, making it a win-win solution for DIYers.

The do-it-yourself or do-it-yourself investing approach is the new trend and we have deep-rooted FOMO for not trying it.

The typical approach is: after all, isn’t it all about investing in stocks and a few other asset classes, how hard can it be?

However, experts say that with the passage of time, it quickly becomes apparent that profitable juggling between different asset classes is not an easy task.

Passive multi-asset fund

Industry experts say passive investing is one of the best options for investors who don’t want to get caught up in the ebb and flow of the market.

Now Chintan Haria, Head – Product Development and Strategy, ICICI Prudential AMC, says: “Given the first premise of investment, which is diversification or asset allocation, a do-it-yourself investor may consider a passively managed multi-asset approach. ”

Not only does it help you diversify across asset classes, but it also protects your portfolio from volatility in individual asset classes. So if you are looking for an ideal solution to multiple problems such as selection, size, timing and taxation, experts say, a passive multi-asset fund may be an optimal solution.

“Passive funds track the underlying index or basket of securities and aim for a return in line with the market. Since the main purpose of these funds is to replicate the index, they tend to see minimal churn,” Haria added.

Furthermore, the fund manager does not have to actively manage the portfolio. Due to these two factors, the management fee charged by passive funds is usually relatively lower.

Passive investing allows you to participate in the growth of the market without worrying about the variables, making it a win-win solution for DIYers.

For example, the ICICI Prudential Multi-Asset Fund of Funds, which allocates 25 to 65 percent to domestic equity ETFs and index funds, 25 to 65 percent to debt ETFs and index funds, 0 to 15 percent cents to Gold ETFs, and 10 to 30% to Global Equity ETFs. Given its allocation to different asset classes, experts say, the system provides optimal diversification and exposure to international stocks, as well as an element of geographic diversification.

Haria explains: “Within domestic equities, the fund manager has the flexibility here to choose sectors/themes and divide between large, mid or small caps to generate alpha. With no tax implications for rebalancing and professional expertise for investments in domestic and global markets, the scheme is emerging as an all-in-one low-cost investment solution.”

He adds: “Despite the scheme being passive in nature, allocation to the different asset classes is actively managed to make it a win-win situation for investors, all leading to better risk-adjusted returns.”

In conclusion, experts say passive multi-asset funds offer the convenience of DIY investing while benefiting from expert fund managers who optimize the portfolio for positive investment results at all times.

This post Why should DIY investors consider investing in passive multi-asset funds?

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