Multi-Asset Allocation Mutual Fund & Its Importance:

What is Multi Asset Allocation Mutual Fund?

Mutual funds that invest at least 10% of their assets across three or more asset classes are considered to be multi-asset allocation funds. These funds’ asset allocation often consists of equities and debt market securities, gold, real estate, and other assets. To put it another way, the such investment allows investors to gain exposure to a diverse portfolio.

These mutual funds’ primary objective is to offer shareholders long-term capital appreciation as a source of return on investment, along with safety via diversified asset allocation. Multi-asset allocation funds are a good choice for investors who want to get more exposure to the market with just one investment.

Who Should Invest in Multi Asset Allocation Funds?

If you’re not comfortable taking on more risk with your money but still want to diversify your holdings in the hopes of generating reliable returns, multi-asset allocation mutual funds may be a good option for you. This is especially the case if your time horizon for making an investment is more than three years. You may want to look at these funds. 

The diversified portfolio reduces exposure to risk and ensures consistent results. This fund’s exposure to equities is what allows the program to provide long-term wealth appreciation. Putting money into a multi-asset allocation fund is a good idea if you want to broaden your portfolio’s holdings beyond just stocks and bonds.

Advantages of Multi Asset Allocation Funds:

Investors benefit a lot from what a multi-asset allocation fund has to offer and how it works. The following are a few to mention;


In today’s economy, not everyone has the financial resources to have a professional build them a portfolio of investments that are specifically suited to their needs. 

By contrast, investors who put their money into diversified funds get both a diversified portfolio and a diversified risk profile. Mutual funds make it easy for investors to get a piece of many different types of assets with just one investment.

Diversified Portfolio

By diversifying across many asset classes, investors may increase their potential return while spreading their risk. It helps investors mitigate losses and generate consistent returns regardless of market conditions.

Diversified asset allocation leads to wealth creation.

Portfolio Rebalancing 

In order to make sure your money is spread out throughout the asset classes that are producing the highest returns, it is crucial that you periodically rebalance your portfolio. 

Diversification of investments Automatic portfolio rebalancing is a feature available in many mutual funds that may be quite useful for investors. Investors need to keep an eye on their portfolios and move assets around so they can handle the inevitable changes in the market.

Low Fees & Charges

The multi-asset allocation fund has not seen a whole market cycle, but it still has the potential to generate high returns in a very short time frame. Fund beneficiaries may include those with extensive knowledge of asset allocation and portfolio rebalancing.

An investor is not required to pay any fees while joining or leaving the aforementioned fund. If investors withdraw 10% of their initial investment during the first year, they can do so without penalty.

A one-percent exit load will be assessed if the remaining investment is not redeemed within a year. On the other hand, if it is sold after a year, no exit load will be applied.

Risk Involved in Multi Asset Allocation Funds Investing:

There is market risk, volatility risk, and concentration risk associated with these funds’ stock holdings. Debt includes elements that are vulnerable to market fluctuations and default risk.

If the fund invests in gold, it may be susceptible to market swings due to fluctuations in the gold price. Liquidity risk is an inherent part of every real estate investment strategy pursued by a fund. Long-term investing, however, reduces the impact of these dangers considerably.

When it comes to investing, a multi-asset allocation fund has relatively minimal risk. This is due to the fact that these funds’ portfolios are structured so that at least 10% of the fund’s total assets are invested across at least three distinct asset classes. Because of this, you will have a portfolio with a wider range of investments, which lowers the risk of concentration. 

How to Select the right Multi Asset Allocation Funds?


Here we see the experience of the Fund Manager who will be handling our Mutual fund portfolio. The success of a fund is heavily dependent on the skills of its management. Therefore, you should investigate the fund manager’s track record and any other funds they may have handled in the same field.

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Past Performance

Analyze the fund’s performance throughout various market conditions. Searching through data from the past five years will yield the most useful findings. Look more closely at how their asset allocation is shifting under various market conditions.


You should pick a fund that fits your financial needs and comfort level with risk. When picking a mutual fund, it’s important to pick one that fits your risk and investing preferences. If you want to know how the mutual fund plans to make money, you need to read the offer document.

Taxation of Multi Asset Allocation Funds

Multi-asset allocation funds’ capital gains are subject to taxes based on their level of exposure to equities. If the plan has more than 65% equity exposure, it will be taxed as an equity fund. Otherwise, it is treated as a debt fund for tax purposes.

Long-term Tax

Equity Fund – If your holding period is over 1 year (12 months) then, up to Rs.1,00,000 gains, are not taxable. In case of over Rs. 1,00,000 gains in a financial year, you’ll be taxed at 10%.

Debt Fund – If your holding period is over 3 years (36 months) then, your entire gains are taxed at 20% with indexation benefits.

Short-term Tax

Equity Fund – If your holding period is under 1 year (12 months) then, your entire gain is taxed at 15% flat.

Debt Fund – If your holding period is under 3 years (36 months) then, your entire gain is taxed as per your income tax slab rate. 

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Top 5 Multi Asset Allocation Funds:

These multi-asset funds put at least 10% of their assets into at least three different types of investments.

Sl. NoScheme NameAUM (In crores)1 Year Return3 Year Return5 Year Return
1Quant Multi Asset Fund334.7520.32%30.80%19.31%
2ICICI Prudential Multi-Asset Fund13,727.6621.23%21.29%14.36%
3HDFC Multi-Asset Fund1,555.397.08%17.42%11.35%
4DSP Flexi Cap Fund7,739.45-0.09%19.76%13.57%
5Axis Triple Advantage Fund1,761.412.82%16.28%12.45%


Multi-asset allocation mutual funds may be an excellent alternative for those who are not willing to take on more risk with their money but yet wish to diversify their assets in the hopes of earning stable returns. This is particularly true if your investing horizon is longer than three years. It’s possible that these investments may suit your needs. 

Having a diverse portfolio lowers your risk and guarantees stable returns. The program’s ability to generate long-term wealth appreciation stems from the fund’s exposure to stocks. If you want your portfolio to be more diverse than just stocks and bonds, a multi-asset allocation fund is a great choice. 

Disclaimer: All the information on this website is published in good faith and for general information purposes only.

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