Best Multi Asset Allocation Funds

Updated: 10-12-2025 11:49:33 AM

What are Multi Asset Allocation Funds?

As each asset class has its own market cycle, asset classes often behave differently during the same economic cycle. Hence, diversification across asset classes is a key to reduce portfolio risk. However, market timing for various multiple asset classes can be difficult for most investors. This is where multi asset allocation steps in.

As per the SEBI circular on categorisation and rationalisation of mutual fund schemes, multi asset funds have to invest in at least three asset classes with an allocation of at least 10% in each of those asset classes. Most multi asset funds usually maintain exposure to equities (including equity derivatives), fixed income instruments (including bonds, treasury bills, commercial papers, etc) and commodities like gold or silver through gold/silver ETFs (exchange traded funds). Some multi asset funds also maintain exposure to real estate and/or infrastructure asset classes by purchasing units of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).

While most multi asset funds try to maintain equity exposure (including that of equity derivatives) of at least 65% to ensure equity taxation for their investors, their actual exposure to other asset classes are primarily determined after factoring in the prevailing market conditions, domestic macro-economic environment, interest rate trends, liquidity conditions, corporate sector performance, geo-political risks/uncertainties and other economy and market-related factors.

Top Multi Asset Allocation Funds

Fund Name	Returns (% p.a.)
	1 year	3 year	5 year	10 year
Quant Multi Asset Allocation Fund	9.37	19.47	24.51	17.68
Nippon India Multi Asset Allocation Fund	14.06	19.38	16.78	–
UTI Multi Asset Allocation Fund	8.41	19.01	15.10	11.61
ICICI Prudential Multi-Asset Fund	13.95	18.86	21.98	16.47
SBI Multi Asset Allocation Fund	13.94	17.20	14.58	11.69
Tata Multi Asset Allocation Fund	10.50	14.71	15.35	–
HDFC Multi-Asset Fund	10.14	14.08	14.10	11.41
Axis Multi Asset Allocation Fund	9.99	13.12	11.74	11.40

Data as on December 9, 2025

Why Invest in Multi Asset Allocation Funds?

• Multi asset funds offer a single stop mutual fund solution for achieving asset class diversification wherein the equity component helps in long term wealth creation, the debt component generates regular income at lower volatility and the exposure to gold, silver and/or other commodities act as hedge against global risks, inflation and other macro-economic risks
• These schemes allow investors to benefit from bull market cycles or upside potential of multiple asset classes
• Diversification offered by these funds help in reducing the impact of inherent market volatility of equities or other asset classes
• Asset classes chosen by multi asset funds usually have low correlation, which helps in reducing the downside risk for their investors
• Investing in these funds eliminate the hassle of choosing/maintaining their asset allocation ratios based on changing market/economic conditions and their future trends
• Investing in multi asset funds allow investors the option to outsource the formulation and management of their asset allocation strategies to professional fund management teams having relevant expertise and experience
• Multi asset mutual fund schemes use also derivative strategies, such as covered calls, to limit their downside risk and increase returns for their investors
• These funds reduce their net equity exposure (i.e. stocks only) during overvalued conditions in the equity market and instead, purchase indices of stocks and indices to mitigate their downside risks
• The exposure to stock and index derivatives is counted as gross equity exposure, which helps these funds to maintain equity exposure of more than 65%, even during adverse equity market conditions, for enabling equity taxation for their investors.
• Investing in multi asset funds can also be more tax efficient than investing in multiple funds for multiple asset classes as the rebalancing of asset class exposures made by these funds are not taxed at the hands of the investors

Explore Investment Options:

Invest in Bonds	Types of Bonds	Bonds vs FD
Corporate Bonds	Tax Free Bonds	Capital Gain Bonds
Government Bonds	Zero Coupon Bonds	Floating Rate Bonds

Risks of Investing in Multi Asset Allocation Funds

• The regulatory requirement of maintaining at least 10% exposure to at least three asset classes can lead multi asset funds to deliver lower returns than those delivered by pure equity funds like large cap mutual funds, mid cap funds, small cap funds or flexi cap funds.
• The same reason may also lead multi asset funds to deliver lower returns than hybrid fund categories like balanced advantage fund or aggressive hybrid funds.

Who Should Invest in Multi Asset Allocation Funds

• Investors seeking capital appreciation over medium to long term investment horizons
• Those seeking the benefits of deeper diversification by investing in a mix of multiple asset classes
• Those seeking higher stability in returns than offered by relatively stable equity fund categories like large cap funds and flexi cap mutual funds
• Investors comfortable with reasonable returns at lower volatility than those offered by pure equity funds
• Those seeking investment exposure to diverse asset classes through a single fund category instead of investing in multiple mutual funds belonging to different asset classes
• Investors seeking to avoid the hassle of setting and managing their asset allocation strategies based on the varying market cycles of various asset classes