Multi-Asset Allocation Funds

 

A multi-asset allocation fund is a type of mutual fund that invests in at least three distinct asset classes such as equity, debt, and gold with a minimum allocation of 10% to each as per SEBI guidelines. These funds typically have a combination of equity, debt, and one more asset class like gold, real estate, etc.  including Exchange Traded Funds (ETFs) for equity, debt, and gold

This approach helps reduce risk through diversification and aims to offer balanced returns over time.

Advantages & Disadvantages of Multi Asset Allocation Funds

 

• Lesser risk than most hybrid funds as the investments are spread across multiple asset classes
• Lower allocation to stocks means the returns can fall behind in rising markets
• Suitable for an investment horizon of at least 3 years
• Gain exposure to multiple asset classes in a single fund
• minimum three asset classes
• Provide equity/Non-equity benefits depending on the asset allocation

The latest study by Ventura for the quarter ended June 2025 shows a clear shift in investor preference toward hybrid schemes with diversified and low-risk profiles. Arbitrage funds and multi-asset allocation funds topped the charts in terms of asset under management (AUM) growth.

Arbitrage funds posted a 22.2% jump in AUM compared to the March 2025 quarter, while multi-asset allocation funds recorded a 15.4% surge. Balanced Hybrid/Aggressive Hybrid funds rose 8.9%, followed by Equity Savings funds at 8.2% and Dynamic Asset Allocation/Balanced Advantage funds at 8.1%. Conservative Hybrid funds saw the slowest growth at 3.4%.

Industry experts interpret the numbers as a sign that more investors are looking for stability without sacrificing returns. 

Performance of Multi-Asset Allocation funds

The response of the different asset classes to inflation is different. Equity grows in high growth –high inflation spells, where fixed income class do the opposite and the commodities spikes. Ordinary investors who has no much knowledge and time to manage portfolio these kind of standardized portfolios give ready solutions

Performance of Leading Asset Allocation Funds (Regular) Completed 5 years as on 03 Sep 2025
Scheme Name	Crisil Rating	AuM (Cr)	1Y	2Y	3Y	5Y	10Y
Quant Multi Asset Allocation Fund - Growth	-	3,666.25	4%	23%	20%	26%	17%
ICICI Prudential Multi-Asset Fund - Growth	3	63,001.13	7%	18%	19%	23%	16%
Nippon India Multi Asset Allocation Fund - Growth	-	6,649.41	8%	20%	18%	17%	-
Tata Multi Asset Allocation Fund - Growth	-	4,013.58	4%	15%	14%	17%	-
UTI Multi Asset Allocation Fund - Regular Plan - Growth	-	5,902.09	3%	20%	19%	16%	11%
HDFC Multi-Asset Fund - Growth	-	4,634.55	6%	15%	14%	15%	11%
SBI Multi Asset Allocation Fund - Regular Plan - Growth	-	9,440.30	7%	16%	16%	14%	11%
Axis Multi Asset Allocation Fund - Growth	-	1,499.90	4%	14%	11%	13%	10%

Source: moneycontrol.com/mutual-funds/performance-tracker/returns/multi-asset-allocation.html

Each fund vary in allocation to different classes and so their benchmarks making  a general recommendation meaningless. Over 30 fund houses have this type of schemes under direct & regulare streams

Selecting a particular scheme is a professional activity. Consult your investment advisor before investing

Happy Investing,

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Asset Allocation Decision : India

 As an investor, you have options to select different asset classes like Fixed Deposits, Gold, Debt and Equity including their variants through many channels. Latest data from India shows that during longer time periods, Equity represented by Sensex or Nifty has outperformed other asset classes. 

The 10 Year Return spectrum

Over the past decade ( 2015 - 2025), the Nifty Total Return Index(Nifty TRI )  has outperformed other investment options, delivering the highest return, closely followed by gold. SBI's 10-year fixed deposits scheme lagged behind at No. 3 position. While historical data provides important insights, future performance of the same asset class may vary, emphasising the importance of diversified investment strategies.

The physical gold, the Nifty 50 TRI index and fixed deposit (FD) as three investment types, all 3 are unrelated with different features. Physical gold is considered the best hedge against inflation, but its price rise is unpredictable. The Nifty 50 TRI is pure equity, representing India's top 50 companies with the highest market value. But its performance is also highly volatile. FD, on the other hand, provides fixed return, but its interest rate is often relatively lower than the returns from other asset classes. However, due to lower risk, many people prefer to have FDs in their portfolio to cover the debt allocation part.

Let us now compare the performance of all three asset classes in the last 10 years as which of them has given the highest return on a Rs 1 lakh investment.

Looking at the last 10-year data, the Nifty TRI index has given the highest return of 13.62%, which is closely followed by gold with a return of 13.46%. Fixed deposit is far behind with a return of 8.25%. However, you need to remember that these are past returns and there is no assurance that these will be repeated similarly in future.

The latest 30 year Return Spectrum

Investors are often on the lookout for the best-performing asset class — with their choices spread across fixed income instruments, like Public Provident Fund (PPF) and bank fixed deposits (FDs), precious metals such as gold and the equity market. 

This study covers period from 1995-2025 and considers Nifty 500, Sensex , Gold, PPF and FD. 

Nifty 500 is a more broad index compared to Nifty index. In the last 30 years, Nifty 500 has given 15.20%, Sensex 14.10%. Gold 12.5%, PPF 8.1% and Fixed Deposit 7.2% 

India in the global market place

Nifty completed 29 years by 2025 having started in 1996.  A comparison of Rate of return on Gold,  Nifty in dollar terms  , S&P 500 is very impressive about India's position global investment field.  In the last 29 years(1996-2025), gold has given around 7.7% returns on a CAGR basis and S&P 500 in dollar terms has given returns in the range of 7.6%. In the same time, Nifty has given a return of 8.5% on a CAGR basis in dollar terms

Prior period studies -India

 The performance of gold and the Sensex stock market index in India from 1979-1980 to 2011-2012 also confirm, that in longer investment periods, equity performs better than gold.

 This gives reason for investing in mutual funds which has equity portfolios by investors. on a generalised basis, it can be said that :

Asset Allocation Decision

An aggressive investor in his 20s/30s can afford to allocate a higher portion of his portfolio towards equities as he has a longer investment horizon and can take on risk and volatility that comes along with it and has less income needs from the portfolio.

 

For a young investor, he advises 70% allocation towards equities (40% in Nifty 50, 15% in Nifty 500 and 15% in Mid-cap and Small-cap fund), 15% towards debt for emergency liquidity needs and the remaining 15% can be allocated towards gold ETFs, physical gold for a hedge against inflation.

 

Contrary to an investor in his 60s will have higher current income needs and will find it difficult to bear the risk of volatility of equities. Hence, allocation of 15-20% towards equities will be apt for him, along with 65-70% in fixed income to cater towards his regular income needs and remaining towards gold for hedging against inflation.

Consult your investment advisor  before investing as personal landscape of needs vary quite differently from one person to other. 

Happy Investing, 

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