Multi-asset allocation funds (MAAFs) have emerged as strong performers among mutual funds (MFs), rivalling medium-term returns from traditional equity categories while maintaining a lower risk profile.
Over the past three years, average returns for this segment have surpassed those of flexicap and largecap funds, for both lump sum and systematic investment plan (SIP) investments.
According to Value Research, the average annualised three-year return for multi-asset funds stands at 19.1 per cent, outperforming flexicap funds at 18.2 per cent and largecap funds at 16.8 per cent, a trend confirmed by available market data.
SIP returns also reflect MAAFs’ leadership: monthly SIP investments over three years have yielded 17.7 per cent annualised returns, higher than flexicap funds’ 15.1 per cent and largecap funds’ 13.4 per cent, according to Advisorkhoj data.
This superior performance is largely attributed to stellar results in the past year, especially amid rallies in gold and silver.
MAAFs’ flexibility to invest across equity, debt, and commodities has allowed them to benefit fully from the surge in precious metal prices while decent fixed income returns have further contributed to overall gains.
Gold has appreciated by about 53 per cent and silver by nearly 60 per cent in the last year alone, marking a significant impact on these funds’ returns.
Funds across the multi-asset category have deftly managed their allocations across equity, debt, and commodities to deliver better returns as compared to pure equity categories.
“For most of the funds, commodity (gold/silver) allocation has hovered in the 15-20 per cent range, which has led to massive outperformance in the last one year,” said Mohit Gang, cofounder and chief executive officer (CEO), Moneyfront.
Growing investor preference for MAAFs is evident: high equity valuations and global uncertainties have bolstered their appeal, making them among the most-recommended categories over the last two to three years.
While MAAFs continue to outshine, experts caution investors to not completely abandon traditional equity schemes because current underperformance may be temporary and a turnaround is possible given steady earnings growth and resilient domestic consumption trends.
“Multi-asset funds are likely to hold up well as volatility and global uncertainty continue to linger.
“At the same time, there is potential for a turnaround of equity schemes, considering steady earnings growth, resilient domestic consumption, and renewed foreign institutional investor (FII) inflows.
“Investors should take a balanced approach with leaning on multi-asset funds for stability and protection against the downside while keeping equity exposure to benefit from the long-term potential,” said Swapnil Aggarwal, director of VSRK Capital.
Reflecting these trends, net inflows into MAAFs surged to over Rs 37,000 crore between August 2024 and July 2025, far outpacing inflows into balanced advantage funds, which received Rs 19,600 crore in the same period.
In July alone, MAAFs (excluding NFO collections) saw record inflows of Rs 4,338 crore, underscoring the momentum in this category.