Sharing its annual outlook for 2023, the fund house believes Indian markets are poised to deliver returns in the range of 8-10% in CY23, slightly below earnings growth.
Aditya Birla Sun Life MF announced the launch of its Multi Asset Allocation Fund on Wednesday. It is an open-ended scheme investing in equity, debt, and commodities. The new fund offer or NFO will be open from January 11-25.
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A Balasubramanian, MD and CEO of Aditya Birla Sun Life AMC, said the new fund will offer investors diversification across asset classes. He added that the fund invests in a diversified portfolio of high-quality debt and money market securities, in order to generate wealth with minimum credit risk.
While the equity portion will follow a flexi-cap approach with a large-cap bias, investing across sectors/themes, the fixed income portfolio will largely use an accrual strategy. The fund will invest 65-80% in equity, 10-25% in fixed income and 10-25% in commodities.
Sharing its annual outlook for 2023, the fund house believes Indian markets are poised to deliver returns in the range of 8-10% in CY23, slightly below earnings growth. It expects a compound annual growth rate of 13-15% in earnings over FY22-FY24, driven by banking along with auto, consumer, and infra sectors.
Pointing at the resilient domestic demand, an expected uptick in rural recovery, rising credit growth, and contraction in commodity prices, the fund house sees no downside risk to earnings growth in the near term. It recommends investors to take measured allocation to equities, in light of above-average valuations and moderating growth, with target equity allocation close to the median level.
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Overall, it estimates the return on equity for Nifty50 firms to improve, forecasting a 15.3% RoE in FY23E. It cites the resilience among Indian corporates to maintain efficiency despite challenges.
In the second half of 2023, it expects emerging markets to rebound on the back of a weaker dollar. As the dollar gained strength in 2022 and the US Fed hiked rates aggressively, EMs faced challenges maintaining their balance of payment.
However, with the Fed likely reaching the end of its rate hike cycle and the dollar weakening, pressure on EMs to maintain BoP levels is easing. Led by China and South Korea, EMs are poised to be on recovery path as developed economies see a slowdown.
