Confused about investment in stocks, gold & silver? Simplify it with multi-asset mutual funds!
With gold, silver, and equity market rallying and investors confused about which one to choose for investment, the market experts recommend that given the current geopolitical backdrop, political uncertainty, and global inflationary pressures, investors should prioritize a multi asset strategy as diversification helps in mitigating risk during turbulent times.
“Given the current geopolitical backdrop including the Israel-Iran conflict, global inflationary pressures, and political uncertainty, investors should prioritize a multi-asset strategy. Diversification across asset classes can help mitigate risk during such turbulent times. In such an environment, multi-asset funds become an ideal choice for the consumer as they offer exposure across equity, debt, commodities, and precious metals,” Viraj Gandhi, CEO, SAMCO Mutual Fund shared with ETMarkets.
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He further shared that multi asset funds provide automatic rebalancing, professional management, and dynamic allocation, which is especially useful during times of elevated volatility and this is not the time to be overly aggressive. Therefore, the path lies in maintaining a diversified portfolio that can absorb shocks and still participate in potential upside, Gandhi recommended.
Another expert mentions that gold prices have rallied due to global macro uncertainties and central bank buying, silver has benefited from both industrial demand and its traditional role as a precious metal, has also gained significantly whereas equity markets are hitting all-time highs, supported by high FII inflows, strong earnings outlook and macro stability.
“Due to these positive trends, this category might attract investors. However, one should remember that diversification should not be done at a fund level as it becomes difficult to reallocate across asset classes as and when required,” Chethan Shenoy, Executive Director & Head – Product & Research at Anand Rathi Wealth Limited shared with ETMutualFunds.
Out of 29 multi asset funds, the majority of funds hold over 65% allocation in equity, 25% in debt and nearly 10% in others which includes gold/commodities. DSP Multi Asset Allocation Fund is an exception which holds nearly 88% in others. (Data source: ACE MF)
Post witnessing the allocation, Shenoy mentions that the uniformity across most schemes limits both diversification and flexibility and since the equity portion is often large-cap heavy, investing across multiple such funds may still not provide meaningful diversification.
He further advised that instead of relying on multi asset allocation funds, investors should consider reaching their desired asset class exposure at the portfolio level and allocating to multi asset funds may not be the most efficient choice, especially when similar or better results can be achieved through a customizable equity-debt mix.
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In the current calendar year so far, multi asset allocation funds received a total inflow of Rs 11,054 crore, the second highest among all hybrid categories. Among six-hybrid mutual fund categories, in March, multi asset allocation funds received the highest inflow of Rs 1,670 crore.
The total AUM of multi asset funds was recorded at Rs 1.18 lakh crore as on May 31, 2025.
As these funds are gaining investors’ interest, Pradeep Kesavan, Fund Manager and Equity Strategist at SBI Mutual Fund recommends multi asset funds along with flexi cap and balanced advantage funds as a good option for new investors with a moderate risk profile.
In the last one year, there were 24 multi asset allocation funds, of which eight gave double-digit, 14 gave single-digit whereas two gave negative returns. WOC Multi Asset Allocation Fund offered the highest return of 15.71% in the last one year, followed by DSP Multi Asset Allocation Fund which gave 13.30% return.
Aditya Birla SL Multi Asset Allocation Fund was the last one to offer double-digit return and it gave 10.40% return in the last one year. HSBC Multi Asset Allocation Fund offered the lowest positive return of 4.53%. Shriram Multi Asset Allocation Fund and Motilal Oswal Multi Asset Fund lost 3.23% and 9.01% respectively in the last one year.
Shenoy is of the opinion that despite the recent performance, multi-asset allocation funds may not fully capitalize on each asset’s potential due to their preset allocation structures and these funds remain equity-heavy, and do not offer significant differentiation from equity funds.
“If investors are already defining their asset mix at the overall portfolio level, adding a multi-asset allocation fund could lead to redundancy or concentration, especially if the fund is skewed toward equity,” he added.
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“Hence, investors should consider avoiding multi-asset allocation funds and instead opt for individual exposure to equity and debt based on their financial goals and risk profile. This allows for the ideal strategy for better returns, long term growth and wealth creation,” Shenoy recommends.
According to the Sebi mandate, multi asset allocation funds invest in at least three asset classes with a minimum allocation of at least 10% each in all three asset classes.
One should always invest based on their risk appetite, investment horizon, and goals.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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