What Are Multi-Asset Allocation Funds?

Multi-asset allocation funds are hybrid mutual funds that invest in at least three different asset classes like equity, debt, and commodities (gold/silver), with a minimum allocation of 10% to each of them.

In addition to this, some schemes also invest in international stocks or international funds of funds (FoF), REITs, and InvITs. Fund managers actively shift allocations based on asset class outlook, economic conditions, interest rates, and risk-return potential—moving into debt or gold when equity is expected to underperform and increasing equity exposure during growth phases.

Why Multi-Asset Funds are Top Performers

Multi-asset allocation funds that invest in a mix of three or more asset classes have been top performers over the past one year, outperforming pure equity funds and surprising many investors.

Why Have Multi-Asset Allocation Funds Been Best Performers Ahead of Equity Funds?

Data from Value Research shows that the multi-asset category has returned an average of 16.1% in the last one year, with the top performer returning 24%.

Multi-asset allocation funds have benefited well due to their allocation to gold and silver, which have seen a sharp rally during the year.

• Silver prices have risen 138% over the last one year.

• Gold prices have rallied 76%.

With most multi-asset funds having a 10–25% exposure to precious metals, they ended up beating equity funds, which returned 12.6% over the last one year.

Who Should Opt for Multi-Asset Funds?

Retail investors who find it difficult to decide how much to allocate to different assets and when to buy or sell can opt for multi-asset funds.

They also suit investors who want exposure to all asset classes in one scheme and prefer to avoid the hassle of buying them separately, while benefiting from automatic asset allocation.

How Are Multi-Asset Funds Taxed?

• Equity-oriented multi-asset funds (65% or more invested in Indian equities):

  • Short-term capital gains (STCG): 20% (if held for less than 1 year)

  • Long-term capital gains (LTCG): 12.5% (if held for more than 1 year), with an annual exemption of ₹1.25 lakh

• Non-equity-oriented multi-asset funds (less than 65% in equities):

  • Short-term gains: Taxed as per the investor’s income tax slab

  • Long-term gains: 12.5% after holding for more than 24 months

Source: Invesco Mutual Funds & Economic Times

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Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.