I invest Rs 60,000 monthly via SIPs. Should I add a multi-asset or balanced advantage fund to reduce volatility?

These are a set of queries raised by ET Wealth readers, which have been answered by our panel of experts.

I am 42, a salaried professional earning Rs 28 lakh annually. I currently invest Rs 60,000 per month through SIPs in a mix of large cap (40%), flexi-cap (30%) and mid-cap (30%) funds. My investment horizon is 12-15 years, primarily for retirement. Is it advisable to add a multi-asset or balanced advantage fund at this stage to reduce volatility, given the current market valuations?

Dilshad Billimoria, MD & Chief Financial Planner, Dilzer Consultants: The asset allocation needs to be an outcome of your risk profile and long-term financial goals, keeping in mind your liquidity needs, income stability, and tolerance for interim volatility. For a 12-15 year horizon, adding 10-15% in a multi-asset allocation fund (MAAF) is advisable to dampen volatility without significantly derailing equity upside. Multi-asset funds provide exposure to equity, debt, and gold/arbitrage, helping reduce overall portfolio swings, especially given current market valuations and uncertain global cues, while also offering a more balanced approach across market cycles.


However, the rate-cut cycle may start to abate by the second quarter of 2026; gold and multi-asset strategies may not perform as strongly as in the recent past, particularly if interest rates stabilise or begin to move upward again.

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In the present scenario which mutual fund category is the most tax efficient? Why?

Vidya Bala, Co-Founder, PrimeInvestor.in: Instead of beginning the investment decision by asking which mutual fund (MF) category offers the lowest tax outgo, investors would do better to first examine whether the product aligns with their risk appetite, financial goals and investment time horizon.

Tax efficiency is certainly important, but it should be a secondary filter, not the primary driver. A fund that saves tax but exposes you to volatility you cannot handle, or locks your money in for a period misaligned with your needs, can do more harm than good. Equity mutual funds continue to be among the most tax-efficient investment options available to retail investors, particularly when held for the long term. They benefit from favourable long-term capital gains taxation and the ability to generate inflation beating returns over extended periods. However, equity funds can experience sharp interim declines, and investors must be prepared for volatility and have a sufficiently long time frame, typically five years or more, to ride out market cycles. At the other end of the spectrum are relatively low risk options such as arbitrage funds. They also provide equity-like taxation.

Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com