Multi Asset Allocation Funds in 2025 – Meaning, Types, Taxation and More
Multi Asset Allocation Fund, in accordance with SEBI guidelines, distribute a minimum of 10% across three or more asset classes, such as equities, debt, gold, real estate, and commodities. This diversified portfolio allocation mitigates risk from volatility in any asset class and gives investors wide exposure, potentially leading to multi asset fund growth and favourable returns.
The allocation strategies within multi asset funds are at the fund manager’s careful discretion. They adjust investments based on thorough market conditions and analysis. This adherence to the principle of diversification offers flexibility to capitalise on varying market trends. For example, during market volatility, the manager may increase allocation to safer instruments like debt or gold, while in bullish markets, they may favour equity-linked schemes for optimal returns, ensuring your investments are in capable hands.
Top 10 Multi Asset Allocation Funds
Here is a list of the top 10 multi asset funds in India based on their 1Y Returns and 5Y CAGR:
| Fund Name | AUM (in Cr.) | CAGR 3Y (%) | Expense Ratio | CAGR 5Y (%) |
|---|---|---|---|---|
| Quant Multi Asset Fund | 3,004.32 | 19.86 | 0.6 | 29.16 |
| ICICI Pru Multi-Asset Fund | 52,257.08 | 18.82 | 0.7 | 24.26 |
| Tata Multi Asset Opp Fund | 3,486.76 | 13.42 | 0.49 | 18.11 |
| HDFC Multi-Asset Fund | 3,837.22 | 13.68 | 0.79 | 16.83 |
| UTI Multi Asset Allocation Fund | 4,978.81 | 17.57 | 0.41 | 16.01 |
| SBI Multi Asset Allocation Fund | 7,132.20 | 14.27 | 0.53 | 14.89 |
| Axis Multi Asset Allocation Fund | 1,270.15 | 8.91 | 1.07 | 13.85 |
| Nippon India Multi Asset Allocation Fund | 4,949.80 | 16.12 | 0.33 | 0.00 |
| Motilal Oswal Multi Asset Fund | 90.45 | 2.70 | 0.9 | 0.00 |
| Baroda BNP Paribas Multi Asset Fund | 1,086.23 | 0.00 | 1.05 | 0.00 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Disclaimer: Please note that the above table is for educational purposes only and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The data on the list is from 11th March 2025. However, for real-time updates on mf NAV and market trends, visit the smallcase MF collection today!
Overview of the Multi Asset Allocation Funds in India 2025
Quant Multi Asset Fund
The Quant Multi Asset Fund follows a data-driven investment strategy, dynamically adjusting its allocation across equity, debt, and commodities. It employs a unique predictive approach, focusing on market cycles and economic indicators to optimise returns while managing risk effectively.
ICICI Pru Multi-Asset Fund
The ICICI Prudential Multi-Asset Fund is one of the most well-known in its category, offering a balanced mix of equity, fixed income, and commodities. It actively rebalances its portfolio based on market conditions, making it a good option for investors seeking both growth and stability.
Tata Multi Asset Opp Fund
The Tata Multi Asset Opportunities Fund follows a well-structured approach to investing in multiple asset classes, aiming to provide consistent returns while reducing volatility. Its diversified portfolio allows investors to benefit from equity growth, debt stability, and gold’s hedge against inflation.
HDFC Multi-Asset Fund
The HDFC Multi-Asset Fund leverages HDFC’s strong research-driven investment approach to balance risk and reward. By allocating funds across stocks, bonds, and gold, it aims to generate steady long-term returns while protecting investors from market downturns.
UTI Multi Asset Allocation Fund
The UTI Multi Asset Allocation Fund is designed to offer a mix of capital appreciation and risk management. It invests across asset classes to maintain a diversified portfolio, ensuring steady returns through different market cycles while benefiting from the expertise of UTI’s fund management team.
SBI Multi Asset Allocation Fund
The SBI Multi Asset Allocation Fund actively manages investments in equities, debt, and commodities, adjusting its portfolio based on market trends. Its goal is to provide investors with stable and inflation-protected returns while capitalising on growth opportunities.
Axis Multi Asset Allocation Fund
The Axis Multi Asset Allocation Fund follows a disciplined investment approach, focusing on risk-adjusted returns. It balances investments in equity, debt, and gold to ensure liquidity, flexibility, and stability, making it a suitable choice for long-term wealth creation.
Nippon India Multi Asset Allocation Fund
The Nippon India Multi Asset Allocation Fund offers diversification across multiple asset classes, benefiting from Nippon’s expertise in active fund management. It seeks to deliver steady performance by strategically allocating investments in different segments of the market.
Motilal Oswal Multi Asset Fund
The Motilal Oswal Multi Asset Fund follows a quality-focused investment strategy, primarily selecting high-growth stocks while maintaining exposure to fixed income and commodities. It aims to generate superior long-term returns by leveraging Motilal Oswal’s research-driven approach.
Baroda BNP Paribas Multi Asset Fund
The Baroda BNP Paribas Multi Asset Fund combines global investment insights with a diversified asset allocation strategy. By investing in equities, bonds, and commodities, it seeks to provide investors with stable and risk-managed returns over time.
What is a Multi Asset Allocation Fund?
Multi-asset allocation funds are investments that combine different types of assets, such as stocks, bonds, and real estate, into a single fund. These multi-asset mutual funds use sophisticated algorithms to adjust their investments based on market conditions, aiming to maximise returns while minimising risk. Now that we understand what a multi asset allocation fund entails, let’s explore some of the best multi asset funds and best multi asset income funds based on their 1Y Returns and 5Y CAGR.
How do Multi Asset Allocation Funds Work?
Multi-asset allocation funds invest in diverse asset classes to manage investment risk. Fund managers continuously monitor and adjust asset allocation based on economic indicators and market trends. This approach ensures these hybrid multi-asset funds are among the best mixed asset funds for investors seeking stability and growth.
Diversification helps mitigate the impact of volatility. SEBI mandates that multi asset funds invest at least 10% in three asset classes. Investors benefit from a professionally managed portfolio offering a unique blend of asset classes, eliminating the need for individual investment research. These funds aim to combine the hedging benefits of gold, the stability of fixed earnings, and the growth potential of equities, enhancing overall investment experience and minimising return volatility. By investing in multi asset funds, you can achieve an optimal balance between risk and returns.
Purpose of Multi Asset Allocation Funds
These multi-asset SIP mutual funds aim to enhance and diversify investment portfolios by allocating assets across multiple classes. This strategy aims to cushion the risks associated with investing in a single asset class that focuses heavily on Diversification.
Features of Multi Asset Allocation Funds
Here are a few key features of multi-asset allocation funds, including the best diversified mutual funds with multi asset allocation:
- Diversification: SEBI mandates a minimum 10% investment across three or more asset classes, ensuring investors access various assets within one scheme. This makes multi-asset funds stand out as among the top multi-asset funds. Investors should carefully review scheme documents and align investments with their goals.
- Fund Manager’s Role: In multi-asset funds, the fund manager plays a crucial role in determining investment style and type. Their autonomy is higher due to the fund’s diversity. Investors should assess the fund manager’s track record and experience to find the best mixed asset funds for their needs.
- Returns: Even the top 10 multi-asset funds in India do not guarantee returns, and market conditions can affect performance, even in debt-focused funds. Now that you know what a multi-asset fund is, investors must plan to invest in it according to their long-term financial objectives.
Factors to Consider While Investing in Multi Asset Allocation Funds
Here’s what to keep in mind when you consider investing in multi-asset allocation funds:
- Investment Duration: Aim for medium to long-term investments, ideally over 3-5 years, avoiding short-term goals. This approach works well when investing in multi-asset index funds or the best multi-asset funds for diversification.
- Financial Objectives: Assess your goals and ensure they align with the fund’s focus on balanced growth and stability rather than high returns. For those looking to generate consistent income, consider the best multi-asset income funds for portfolio stability.
- Risk Tolerance: Determine if you’re comfortable with the fund’s conservative risk profile or if you seek higher returns with increased risk.
- Cost Analysis: Understand the fund’s expense ratio and potential impact on your net returns due to active management fees.
- Performance History: Review the fund’s past performance for consistency, though it does not guarantee future results.
- Fund Manager Expertise: Investigate the manager’s background and track record in managing diversified investments. The best multi-asset funds are often led by seasoned fund managers who excel in making prudent multi-asset selection fund decisions.
Who Should Explore Multi Asset Allocation Funds?
Investors seeking stable returns without high risk can benefit from investing in a Multi-Asset Allocation mutual fund. The best hybrid asset allocation funds offer diversification across various financial instruments, making it suitable for at least five years of long-term investments. Investors can opt for an equity-focused or debt-focused multi-asset fund, depending on their risk tolerance and investment objectives. While equity-linked schemes offer the potential for higher long-term gains, they come with increased risk. Conversely, debt-oriented schemes provide stability for investors seeking consistent returns. These funds often appear on a mutual funds list as a type of balanced fund or hybrid funds.
How to Choose the Best Multi Asset Allocation Funds?
When selecting the best multi-asset allocation funds for your investment portfolio, consider the following factors:
- Investment Objective: Determine your investment goals, whether it’s capital appreciation, income generation, or a balanced approach. Look for multi-asset funds that align with your objectives.
- Asset Allocation Strategy: Evaluate the fund’s asset allocation strategy, which typically includes a mix of equities, bonds, and other asset classes. Ensure the strategy is well-diversified, as seen in top mutual fund direct growth options.
- Fund Performance: Analyse the fund’s historical performance, focusing on long-term returns and consistency. Look for multi asset SIP mutual funds with competitive returns relative to their benchmarks and peers. This mutual fund analysis is crucial.
- Fund Manager Expertise: Assess the fund manager’s expertise and track record. A skilled and experienced manager can significantly improve fund performance and asset allocation decisions.
- Expense Ratio: Consider the fund’s expense ratio, which represents the annual fees charged by the fund. Lower expense ratios can contribute to higher net returns for investors over time.
- Risk Management: Evaluate the fund’s risk management practices, including measures to mitigate downside risk and volatility. The best multi-asset funds employ robust risk management techniques to protect investors’ capital.
- Fund Size and Liquidity: Consider the fund’s size and liquidity, as larger funds may offer better economies of scale and liquidity benefits. Ensure that the fund’s size is appropriate relative to its investment strategy.
How to Invest in Multi Asset Allocation Funds?
You can easily invest in multi asset allocation mutual funds by following these steps:
- To invest in mutual funds, you can visit an equity investment platform such as smallcase or Tickertape.
- The next step would be to research and identify the best multi asset allocation funds to invest in which aligns with your investment thesis. You can easily select and learn more about the best multi asset allocation funds with the help of a financial tool like the Tickertape Mutual Fund Screener. With 50+ pre-loaded filters, it helps you to create a comprehensive list by giving insights about the fund’s performance. Try it now!
- Once you have selected the funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number. Click on ‘Discover‘ and enter the name of the specific mutual fund name in the search bar and hit enter. You can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!
How do Multi Asset Allocation Funds Generate Returns?
Multi asset allocation Funds, also known as MAAPs, generate multi asset allocation fund returns through strategic diversification across multiple asset classes. These funds actively allocate investments across equities, fixed-income securities, commodities, and other assets to optimise returns while managing risks.
- Dynamic Asset Allocation: Multi-Asset Allocation Funds dynamically adjust their asset allocation based on market conditions and economic outlook. Fund managers continuously assess various asset classes’ performance and reallocate investments accordingly to capitalise on opportunities and mitigate risks.
- Capitalising on Market Trends: Fund managers leverage market trends and economic indicators to identify attractive investment opportunities. By analysing macroeconomic factors such as interest rates, inflation, and global market trends, they adjust asset allocation to maximise returns in different market scenarios.
- Risk Management Strategies: The best multi-asset allocation funds for risk management, especially the top multi-asset funds with high returns, employ risk management strategies to protect investors’ capital during market downturns. This includes diversification across asset classes, geographical regions, and investment styles to minimise portfolio volatility and preserve capital.
- Active Fund Management: Fund managers actively monitor and rebalance the fund’s portfolio to ensure optimal asset allocation. They may reallocate investments between equities, bonds, real estate, and alternative assets based on changing market conditions and investment opportunities.
- Flexibility and Adaptability: The best hybrid multi-asset mutual funds for long term can invest in various asset classes and investment instruments. This flexibility allows fund managers to adapt quickly to changing market dynamics and capitalise on emerging opportunities to generate returns.
Benefits of Investing in Multi Asset Allocation Funds
Investing in Multi-asset allocation Funds offers key advantages that include:
- Enhanced Diversification: These funds mitigate risk by spreading investments across multiple asset classes and yielding consistent returns across various market cycles.
- Automated Portfolio Rebalancing: Rather than manually adjusting portfolios, fund managers handle the task, ensuring alignment with market conditions and investment objectives.
- Customised Portfolios: Multi-Asset Allocation Mutual Funds leverage industry research and market monitoring to construct well-balanced portfolios tailored to optimise returns.
- Flexible Entry and Exit: Investors can enter and exit the fund without incurring charges. Additionally, partial redemptions within the first year are permitted without penalties, making these funds suitable for short-term and long-term investors.
Risks of Investing in Multi Asset Allocation Funds
Investing even in the best mutual funds in India has its limitations. Before investing, it’s essential to understand the following drawbacks:
- Understanding the Investment: Multi asset allocation funds spread investments across different funds, making tracking challenging. This complexity can obscure specific risks and allocation strategies, making it hard to anticipate performance in varying market conditions.
- Growth Potential vs. Stability: While multi-asset funds offer risk reduction through diversification, this diversification can limit growth potential. They often don’t yield the high returns of riskier, more focused investments.
Taxability of Multi Asset Allocation Funds
Multi Asset Allocation Funds have varying equity exposure, leading to differing tax implications on returns. Amendments to the 2020 Budget dictate that investors are taxed based on their fund’s classification.
According to the recent changes in multi asset fund taxation, funds with over 65% equity exposure are taxed as equity-oriented, while those with lower exposure are taxed akin to debt funds.
Taxation on Equity Mutual Funds:
– Short-Term Capital Gains (STCG): The mutual funds held for less than a year are known as STCG. These gains are taxed at 20%.
– Long-Term Capital Gains (LTCG): The mutual funds held for over a year are known as LTCG. If the gains are below Rs. 1.25 lakh, they are tax-free. If the gains are above Rs. 1.25 lakh, the gains will be taxed at 12.5% without any indexation benefit.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
Taxation on Debt Mutual Funds
| Capital Gains Tax | Description |
| Short-Term Capital Gains (STCG) | If you sell your debt fund units within three years (36 months), the tax will be as per your income tax slab. |
| Long-Term Capital Gains (LTCG) | For debt funds held for over three years (36 months), the tax rate is now a flat 12.5% without indexation benefits. |
The removal of indexation benefits for debt funds means the entire gain from selling a debt fund after three years (36 months) will be taxable at a flat rate of 12.5%.
To Wrap It Up…
Now that you know what are multi asset funds, your ideal asset allocation hinges on your unique situation. This includes your own age, investment goals, time frame, and risk tolerance. Multi asset allocation funds offer a diverse and comprehensive investment strategy, especially suitable for investors with lower risk tolerance or minimal time for active management. This might be an attractive benefit for investors wishing to diversify their portfolios. However, it is absolutely essential for investors to conduct their own market research and consult a financial advisor before investing in anything.
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Frequently Asked Questions(FAQs) on Multi Asset Allocation Funds
Multi-asset allocation funds are investments that combine different types of assets, such as stocks, bonds, and real estate, into a single fund. These funds use sophisticated algorithms to adjust their investments based on market conditions, aiming to maximise returns while minimising risk.
Multi Asset Allocation Funds provide access to diverse asset classes, adjusting their mix based on predefined rules to achieve an optimal blend.
Multi Asset Allocation Funds determine their investment allocation based on chosen asset classes. The fund also determines the percentage allocation to each class and sets thresholds for transferring funds between classes.
Investors seeking alternatives to fixed income or slightly higher returns with lower risk can opt for multi-asset allocation funds. These funds spread investments across various asset classes, making them suitable for beginners and those with limited financial expertise.
Multi Asset Allocation Funds have varying equity exposure, leading to differing tax implications on returns. Amendments to the 2020 Budget dictate that investors are taxed based on their fund’s classification. Funds with over 65% equity exposure are taxed as equity-oriented, while those with lower exposure are taxed akin to debt funds.
