Why multi-asset funds are becoming investors' go-to choice

Multi-asset funds are emerging as a core portfolio holding for many investors due to their allocation to a diverse mix of assets, with holdings spread across equity, debt, precious metals, REITs and international equities.

What are multi-asset allocation funds?
Multi-asset allocation funds are mutual fund schemes that invest in at least three different asset classes, such as equity, debt and commodities (gold/silver), with a minimum allocation of 10% to each of them. In addition, some schemes also invest in international stocks, international fund of funds (FoFs), REITs and InvITs. Fund managers actively shift allocations across asset classes based on the economic outlook, interest rates and risk-return potential, moving more into debt or gold when they expect equities to underperform and increasing equity exposure during growth phases.

How many multi-asset funds does the mutual fund industry have?
The mutual fund industry has 35 schemes. The assets under management grew 66% from Rs 1.28 lakh crore in July 2025 to Rs 2.13 lakh crore in June 2026.


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Why are they getting popular with investors?
Wealth managers point out that portfolios that follow a disciplined asset-allocation approach tend to perform well over the long term. This means allocating across asset classes such as equity, debt, precious metals, REITs/InvITs and international equities. However, few investors can decide when to enter or exit an asset class. Hence, wealth managers suggest allocating to a multi-asset allocation fund, where the fund manager takes these decisions on their behalf. As a result, the category is becoming increasingly popular.

Why have multi-asset allocation funds returned more than large-caps over the last one year?
Data from Value Research shows that the multi-asset category has returned an average of 12.77% over the last one year, with the top performer returning 23%, while the Nifty 50 returned 2.04%. Analysts point out that the main reason for these higher returns is their allocation to gold and silver, which have seen a sharp rally during the year. In rupee terms, silver prices have risen 93.5% over the last one year, while gold has gained 42.92%. With most multi-asset funds having a 10%-25% exposure to precious metals, they ended up outperforming equity funds.

How are multi-asset funds taxed?
In the case of equity-oriented multi-asset funds that invest 65% or more in Indian equities, with the balance in fixed income and precious metals, an investor pays short-term capital gains tax of 20% if the units are held for less than a year, and long-term capital gains tax of 12.5% if the units are held for more than a year, with an annual tax exemption of Rs 1.25 lakh. Non-equity-oriented multi-asset funds that have between 35% and 65% in equities are treated differently. Here, short-term gains are taxed according to the investor’s income-tax slab, while long-term gains are taxed at 12.5% after a holding period of more than 24 months.