Murekha Universal Portfolio

The objective of a Universal Portfolio Fund is to provide comprehensive diversification and balanced growth by investing across a wide range of asset classes, including but not limited to:

• Equities (stocks) for capital appreciation
  
  

• Bonds (fixed-income securities) for income and stability
  
  

• Real estate for additional diversification and inflation hedging
  
  

• Commodities (e.g., gold, oil) for protection against economic volatility
  
  

• Alternative investments (e.g., hedge funds, private equity) for high returns with higher risk
  
  

Key Goals of a Universal Portfolio Fund:

1. Maximum Diversification: Spread investments across various asset classes, regions, and sectors to reduce risk and enhance returns.
   
   

2. Long-term Capital Growth: Aim for growth by investing in a mix of high-risk and stable assets.
   
   

3. Risk Mitigation: Offer resilience during market fluctuations by balancing between growth and defensive investments.
   
   

4. Inflation Protection: Utilize commodities, real estate, and other inflation-resistant assets.
   
   

5. Accessibility to Alternative Investments: Provide exposure to non-traditional assets (e.g., hedge funds, private equity) that may not be easily accessible to individual investors.
   
   

6. Adaptive Strategy: Depending on market conditions, the fund may shift its focus between various asset classes to take advantage of opportunities while managing risks.
   
   

Key Differentiator:

Unlike typical hybrid funds, which combine a few asset classes (stocks and bonds), a Universal Portfolio Fund aims to cover all potential investment areas, providing broader diversification across both traditional and alternative investments.

Structure of a Universal Portfolio Fund:

A Universal Portfolio Fund is designed to provide a highly diversified investment approach by including various asset classes and investment strategies. Here’s how it typically works:

1. Equities (Stocks):
   
   

   • Goal: Capital appreciation and long-term growth.
     
     

   • Risk Profile: High, as stock markets can be volatile.
     
     

   • Allocation: May range from 20% to 60% depending on the fund's strategy (some funds focus more on growth, while others allocate more to stability).
     
     

2. Bonds (Fixed Income):
   
   

   • Goal: Income generation and stability.
     
     

   • Risk Profile: Low to moderate, as bonds provide regular interest payments.
     
     

   • Allocation: Typically 20% to 50%. The proportion depends on how much the fund emphasizes income and risk mitigation.
     
     

3. Real Estate:
   
   

   • Goal: Capital growth and inflation protection.
     
     

   • Risk Profile: Moderate, as real estate can provide consistent income (via rental yields) and appreciation but can also be illiquid.
     
     

   • Allocation: Around 10% to 30%, either directly in properties or through real estate investment trusts (REITs).
     
     

4. Commodities (Gold, Oil, Agricultural products, etc.):
   
   

   • Goal: Hedge against inflation, geopolitical risks, and currency fluctuations.
     
     

   • Risk Profile: High, since commodities can be volatile and heavily impacted by external factors (like weather or global politics).
     
     

   • Allocation: Usually around 5% to 20%, depending on the fund's approach to inflation protection.
     
     

5. Alternative Investments (Hedge funds, Private equity, Venture capital):
   
   

   • Goal: High returns and diversification from traditional markets.
     
     

   • Risk Profile: Very high, as alternative investments often carry substantial risk but can generate significant returns.
     
     

   • Allocation: Around 5% to 15%, depending on the fund's strategy.
     
     

6. Cash and Cash Equivalents (Money Market Funds, Short-term Treasuries):
   
   

   • Goal: Liquidity and stability.
     
     

   • Risk Profile: Very low, providing safety and liquidity in case of sudden market downturns.
     
     

   • Allocation: 0% to 10%, ensuring liquidity for rebalancing and withdrawals.
     
     

How Universal Portfolio Funds are Managed:

• Active vs. Passive Management: Some Universal Portfolio Funds are actively managed, where fund managers make decisions about asset allocation based on market conditions. Others may be passively managed, using predetermined allocation strategies based on a model portfolio.
  
  

• Dynamic Allocation: These funds may adjust the mix of asset classes depending on economic conditions or forecasted market trends. For example, if markets are volatile, they may reduce equity exposure and increase bond or commodity allocations for safety.
  
  

Key Differences:

• Risk: Universal Portfolio Funds typically have a moderate to high risk profile because of their diversification across various asset classes. In contrast, equity funds are higher risk as they focus on stocks alone, while bond funds are lower risk, focusing mainly on income-generating, stable investments.
  
  

• Diversification: Universal Portfolio Funds offer the broadest diversification, covering equities, fixed income, real estate, commodities, and alternatives. Funds like equity funds or bond funds are focused on just one asset class, which limits diversification.
  
  

• Objective: While equity funds focus on capital growth and bond funds on stable income, Universal Portfolio Funds aim to strike a balance between these goals, offering both growth and income with added protection against market volatility through alternative investments and commodities.
  
  

When to Consider a Universal Portfolio Fund:

• If you’re an investor looking for broad diversification and want exposure to multiple asset classes in one fund.
  
  

• If you prefer a moderate risk strategy that balances growth with downside protection.
  
  

• If you want exposure to alternative investments like private equity or commodities, which may be hard to access individually.
  
  

Advantages of a Universal Portfolio Fund:

1. Broader Diversification: Access to a wide range of asset classes reduces the risk of heavy losses from any single market.
   
   

2. Inflation Protection: Exposure to commodities and real estate can act as a hedge against inflation.
   
   

3. Flexibility: Fund managers can adjust the strategy based on changing market conditions or macroeconomic trends.
   
   

4. Risk-Reward Balance: Offers a mix of growth, income, and stability, appealing to long-term investors looking for a diversified strategy.