Diversification is one of the key principles of investing followed by domestic and institutional investors alike worldwide.
Mutual funds adhere to this principle of investing by incorporating different categories of equities, and sometimes different asset classes.
Multi asset funds follow this principle in letter and spirit by giving exposure to a minimum of three asset classes such as gold, equity and debt. The minimum allocation to each asset class is 10 percent, as per the Sebi’s categorisation of mutual fund schemes.
There are 13 schemes in this category with total AUMs of ₹35,288 crore, reveals the AMFI data as on Aug 31, 2023.
These are some of the top performing funds in this category
| Multi asset allocation schemes | 1-year-returns (%) |
| ICICI Prudential Multi Asset Fund | 19.40 |
| Nippon India Multi Asset Fund | 15.17 |
| SBI Multi Asset Allocation Fund | 15.68 |
| UTI Multi Asset Fund | 15.93 |
(Source: AMFI; returns as on Oct 6, 2023)
Incidentally, these schemes are the least popular among hybrid mutual funds. The most popular are balanced hybrid funds (30) followed by dynamic asset allocation funds (29) and arbitrage funds (26).
There are three key features of multi-asset funds:
1. These funds give exposure to a broad number of asset classes, thus offering a level of diversification.
2 These funds invest in a slew of traditional equity and fixed income strategies, index-tracking funds, financial derivatives as well as commodity like gold
3. This diversity allows portfolio managers to balance risk with reward and deliver long term returns for investors, particularly in volatile markets.
Key reasons for which you can invest in these funds:
1 Diversity: First and foremost, these are diverse mutual funds and have an exposure to multiple asset classes.
2. Lack of concentration: Since each asset class has a minimum exposure of 10 percent, there is no concentration of one asset class.
3. Optimum ratio of risk and reward: Thanks to a healthy share of diversity of assets, fund managers can manage an optimum share of risk and reward.
