Canara Robeco Multi Asset Allocation Fund – Direct (G) : NFO Details

Canara Robeco Mutual Fund has sent SEBI a draft offer document for its future Canara Robeco Multi Asset Allocation Fund. This open-ended hybrid plan will invest in a variety of asset types, such as debt instruments, stocks, and commodities like exchange-traded funds (ETFs) for gold and silver. Canara Robeco Multi Asset Allocation Fund is an open-ended hybrid scheme that invests across multiple asset classes including equity and equity-related instruments, debt and money market securities, as well as Gold and Silver ETFs.

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The primary investment objective of the scheme is to generate long-term capital appreciation through a diversified portfolio. Units can be purchased or redeemed on any business day at the applicable NAV, although they are not listed on any stock exchange. Redemption proceeds are typically dispatched within three working days, subject to certain conditions. The fund follows a composite benchmark comprising 65% BSE 200 TRI, 20% NIFTY Short Duration Debt Index, 10% domestic gold price, and 5% domestic silver price, as per AMFI’s Tier I Benchmark framework for multi-asset allocation schemes.

Details of the NFO: Canara Robeco Multi Asset Allocation Fund – Direct (G)

Objective:

The investment objective of the Scheme is to generate long-term capital appreciation from a portfolio investing in Equity and Equity  related Instruments, Debt and Money Market Instruments, Gold ETFs and Silver ETFs. There is no assurance that the investment objective of the Scheme will be achieved.

Investment Strategy:

Canara Robeco Multi Asset Allocation Fund will follow an active investment strategy and aims to generate long-term capital appreciation  through  predominantly investing in  a  mix  of  Equity  &  Equity  related Instruments, Debt & Money Market Instruments, Gold ETFs, Silver ETFs, units of REITs and InvITs and such other asset classes as SEBI may prescribe from time to time. Different asset classes exhibit different risk-return profiles and relatively low correlations to each other as compared to investments within the same asset class. The fund manager will determine asset allocation between equity and equity-related instruments, debt and money market instruments, gold ETFs, silver ETFs, other asset classes depending on prevailing market and economic conditions as per prescribed asset allocation. The asset allocation at any point in time will be a function of various factors such as equity valuations, interest rates, views on the asset classes and risk management, etc.

Equity and Equity-related Instruments:

The scheme will invest in a well-diversified portfolio of equity & equity-related instruments. While selecting stocks, the fund manager will pay close attention to the company’s fundamentals, quality of financials and management, market leadership and other key factors. With no market cap or sectoral bias, the scheme will invest across industries. The scheme may seek to invest in Arbitrage opportunities in Indian Equities. The endeavour will be to ensure the allocation to equity is greater than 65%, which will provide the scheme with equity fund taxation.

Debt and Money Market Instruments:

The scheme will invest in a diversified range of debt and money market instruments. The scheme's assets will be allocated by the fund manager based on the current interest rate environment, yield curve, yield spread, and liquidity of the various instruments. To position the portfolio effectively, the Investment Manager will actively  analyze  the current general economic environment (especially interest rates and inflation), general liquidity, political environment as well as other aspects of the economy and markets.

Derivatives: The scheme may invest in derivatives such as futures & options and such other derivative instruments like stocks/ index futures, interest rate swaps, forward rate agreements, or such other derivative instruments as may be introduced and permitted by the SEBI from time to time.

The scheme may invest in derivatives for the purpose of hedging, portfolio balancing, and other purposes as may be permitted under the regulations. Hedging  using  interest  rate  futures  could  be  perfect  or  imperfect,  subject  to  applicable regulations. The margin may be placed in the form of such securities/instruments/deposits as may be permitted/eligible to be placed as margin from the assets of the scheme. The securities/instruments/ deposits so placed as margin shall be classified under the applicable category of assets for the purposes of asset allocation.

Risk associated with Canara Robeco Multi Asset Allocation Fund – Direct (G)?

Equity and equity related securities are volatile and prone to price fluctuations on a daily basis. The liquidity of  investments  made  in  the Scheme may be restricted by trading volumes and settlement periods. Settlement periods may be extended significantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases, due to settlement problems, could cause the Scheme to miss certain investment opportunities. Similarly, the inability to sell securities held in the Scheme portfolio would result at times, in potential losses to the Scheme, should there be a subsequent decline in the value of securities held in the Scheme portfolio.

The liquidity and valuation of the Scheme’s investments due to its holdings of unlisted Securities may be affected if they have to be sold prior to the target date for divestment. All investments involve risks and there can be no guarantee against loss resulting from an investment in any share of the Scheme, nor is there any assurance that the Scheme’s investment objective will be attained in respect of its overall performance. In certain circumstances the right of the investors of the Scheme may be suspended. Consequently, the NAVs of units issued under the Scheme may be adversely affected.

Further, the Equity and Equity Related Instruments are risk capital and are subordinate in the right of payment to other securities including debt securities, the value of the Scheme investments may be affected by interest rates, currency exchange rates, changes in law / policies of the government, taxation laws and political, economic or other developments which may have an adverse bearing on individual Securities, a specific sector or all sectors. Investments in equity and equity related securities involve a degree of risk and investors should not invest in the equity Schemes unless they can afford to take the risk of losing their investment.

The Fund Manager of the Scheme may invest in the Securities of smaller, lesser-known companies. These investments may involve greater risk and the possibility of greater portfolio price volatility than investing in larger,  more  mature or better known firms. Amongst other reasons for the greater price volatility of Securities of small companies and unseasoned stocks are the less certain growth prospects of smaller firms, the lower degree of liquidity of the markets for such stocks, and the greater sensitivity of small companies to changing economic conditions.

For example, these companies are associated with higher investment risk than that normally associated with larger firms due to the greater business risks of small size and limited product lines, markets, distribution channels and financial and managerial resources. Such Securities, including those of newer or recently restructured companies or those which may have experienced financial difficulties, may be more volatile in price than larger capitalized stocks. Securities which are not quoted on the stock exchanges are inherently illiquid in nature and carry a larger liquidity risk in comparison with securities that are listed on the exchanges or offer other exit options to the investors, including put options.

What type of investors Suitable for this Fund?

1. Long term capital appreciation,
2. Investments in equity and equity related instruments, debt and money market instruments, Gold ETFs, Silver ETFs, Units  issued by REITs and InvITs.