Multi-asset mutual funds have been grabbing headlines in 2025. A Motilal Oswal study shows they scooped up roughly 74% of net inflows into the entire hybrid fund category in March 2025 – far more than any single balanced-advantage or aggressive hybrid fund. Why the stampede? In short, these all-in-one funds promise built-in diversification and a steadier ride when markets wobble. This piece looks at what multi-asset funds are, why investors are crowding into them, and how they’ve performed compared to plain equity or hybrid schemes.
What Are Multi-Asset Funds?
Multi-asset allocation funds (also called multi-asset funds) are hybrid mutual funds that must invest in at least three asset classes By regulation they spread money across stocks (equity), bonds (debt) and often commodities like gold; some also include international equities, REITs or even infrastructure. Think of it like a combo platter: one fund that holds slices of many markets. The goal is to simplify life for investors who want instant diversification.
On average, a typical multi-asset fund’s mix looks something like this:
| Asset Class | Typical Allocation (Feb 2025) |
|---|---|
| Equity (stocks) | 50% |
| Debt (bonds) | 25% |
| Commodities (gold) | 15% |
| Cash & equivalents | 10% |
This balanced blend helps cushion against swings in any one market. For example, if stocks dip but gold or bonds are steady, the overall fund doesn’t fall as hard. And because the fund manager rebalances internally, investors don’t incur extra taxes each time the mix shifts – a subtle perk over doing multiple one-asset trades themselves.
Why Investors Are Flocking to Them
There’s a lot going on in markets right now, and that’s made multi-asset funds more appealing. In late 2024 and early 2025, Indian equities showed volatility after a long bull run, debt yields were attractive (as interest rates peaked), and gold held its own amid global tensions. Many investors found this mix of headwinds unnerving. Multi-asset funds offered a one-stop solution: diversify your portfolio in a single fund.
By late 2024, the assets under management in this category had roughly doubled from a year earlier, hitting over ₹1.02 lakh crore by Sep 2024. As one analysis notes, multi-asset funds have become a “preferred choice” for investors seeking diversification across equities, bonds and commodities when markets waver. Experts agree: they “offer diversification and cushion against market volatility”, which is exactly what many nervous savers want right now. In this context, the March 2025 inflow frenzy makes sense. People who might otherwise juggle several funds instead just parked money in a multi-asset scheme, driving its share of hybrid inflows to a hefty 74%.
Performance Snapshot
How have multi-asset funds done? On average, they’ve delivered respectable, if not eye-popping, returns. For the patient, they often look better on a risk-adjusted basis than pure equity funds. For example, Ventura Securities found that multi-asset allocation funds actually outperformed most general equity schemes over 1-, 3- and 5-year spans. In other words, by staying diversified they often avoid the wild swings of single-asset funds.
The trade-off is clear in market extremes. In recent downturns, multi-asset funds acted like shock absorbers: they fell much less than stock-heavy peers, but they didn’t keep pace in big uptrends. As Value Research’s analysis shows, in the latest market dip (Sept 2024 to Apr 2025) a typical multi-asset fund lost only about 4.2%, whereas a flexi-cap equity fund fell ~14.2%. Conversely, in the long bull run (June 2022 to Sept 2024) multi-asset funds returned ~22.5%, lagging behind equity’s 31.9%. The chart below (from Value Research data) illustrates this pattern:
| Market Phase | Multi-Asset Funds | Aggressive Hybrid Funds | Flexi-Cap Equity Funds |
|---|---|---|---|
| Sep 2024 – Apr 2025 (bear) | –4.2% | –8.9% | –14.2% |
| Jun 2022 – Sept 2024 (bull) | +22.5% | +25.7% | +31.9% |
In plain terms, multi-asset funds steady the ride during market drops, at the cost of some peak gains. Many investors see this as a worthwhile balance – they may miss a bit of a sizzling rally, but they avoid the full brunt of a slide. This risk-smoothing can be exactly what goal-focused savers want, especially if they’re not comfortable timing the markets themselves.
Experts Weigh In
Financial advisors say multi-asset funds are especially good for investors who want a simple, hands-off strategy. Aakanksha Shukla of Master Capital notes that these funds “follow a dynamic strategy, adjusting their mix depending on market conditions,” which gives a balanced approach and moderate risk without the sharp volatility of pure equity investments. In practice, that means the fund manager can shift money from expensive stocks into, say, bonds or gold when needed. Sorbh Gupta of Bajaj Finserv concurs: because multi-asset schemes “diversify across asset classes,” they bring “relative stability” to an investor’s portfolio. In short, experts say these funds are a ready-made diversified option for people who don’t have time or expertise to manage a multi-fund portfolio by themselves.
(One cautionary note: since all investors share the same fund mix, you can’t tailor it 100% to your personal risk profile. But for many average investors, the convenience of an all-in-one fund outweighs that drawback.)
The Takeaway
Multi-asset funds are enjoying a moment in the sun, and for good reasons. They combine stocks, bonds, gold and more into a single package, which has proved very attractive amid today’s volatile markets. Inflows spiked in early 2025 as investors chased steady returns without having to pick individual funds for each asset class. Of course, these funds trade a bit of upside in booming markets for a smoother ride in downturns – exactly the trade many cautious investors are willing to make now.
As always, there’s no one-size-fits-all answer. Multi-asset funds can be a great fit for someone who wants diversification in a single tap, but it’s still important to check a fund’s strategy, fees and actual asset mix. Most importantly, align any investment with your own goals and comfort with risk. If you value simplicity and steady growth over chasing the highest possible peak, a multi-asset allocation fund might deserve a spot in your portfolio. Happy investing, and don’t forget to review your goals and risk appetite regularly before making any decisions!
