{"id":53505,"date":"2026-05-12T14:15:11","date_gmt":"2026-05-12T08:45:11","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=53505"},"modified":"2026-05-12T14:18:05","modified_gmt":"2026-05-12T08:48:05","slug":"multi-assets-funds","status":"publish","type":"post","link":"https:\/\/www.tatacapital.com\/blog\/wealth-services\/multi-assets-funds\/","title":{"rendered":"Multi-asset funds explained: Why returns are not the same"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p><strong>Summary<\/strong><\/p>\n\n\n\n<p><em>A<strong> multi-asset allocation fund<\/strong> blends diverse asset classes into a single portfolio.<\/em><\/p>\n\n\n\n<p><strong><em>Multi-asset funds<\/em><\/strong><em> provide risk-adjusted returns that are vital for long-term wealth creation. It gives investors exposure to equity, debt, international, commodities, indices, ETFs, etc., through a single fund scheme. These funds are now available in a variety of sub-categories, including FoFs, which makes them customized for specific investor expectations.<\/em><\/p>\n\n\n\n<p><strong>Multi-asset fund<\/strong>s are ideal for investors who are looking for exposure to multiple asset classes through a single fund. If you want to invest across debt, equity, commodities, etc., without actively managing each of them, the answer to your need is a <strong>multi-asset allocation fund<\/strong>.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is a multi-asset allocation fund?<\/strong><\/h2>\n\n\n\n<p>The definition of a <strong>multi-asset allocation fund,<\/strong> as defined by the Securities and Exchange Board of India (SEBI), can be summarized as,<\/p>\n\n\n\n<ul>\n<li><strong>Multi-asset allocation fund<\/strong>s are open-ended mutual funds<\/li>\n\n\n\n<li>These funds must invest in at least three asset classes<\/li>\n\n\n\n<li>At least 10% allocation must be maintained in each asset class<\/li>\n<\/ul>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/gift-city-an-investment-opportunity-for-nris\/\">GIFT city funds for NRI<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Which categories do multi-asset funds invest in?<\/strong><\/h2>\n\n\n\n<p>While SEBI requires <strong>multi-asset fund<\/strong>s to invest in at least three asset classes, these funds can invest across a variety of assets. Some of the assets that <strong>multi-asset fund<\/strong>s typically invest in are,<\/p>\n\n\n\n<ul>\n<li><strong>Equity and equity-related instruments<\/strong> \u2013 This includes stock market investments across different market capitalizations, like large cap, mid cap and small cap stocks.<\/li>\n\n\n\n<li><strong>Debt instruments<\/strong> \u2013 Assets in the debt category include government bonds (G-Secs), corporate Bonds, fixed income securities, etc.<\/li>\n\n\n\n<li><strong>Commodities<\/strong> \u2013 It predominantly includes investments in precious metals such as gold and silver primarily through Exchange-Traded Funds (ETFs) and gold\/silver funds as direct commodity exposure is limited in mutual funds.<\/li>\n\n\n\n<li><strong>Global<\/strong> \u2013 It invests in global stocks or funds across different countries.<\/li>\n\n\n\n<li><strong>Other categories<\/strong> \u2013 To stabilize the portfolio through diversification, these funds also invest in instruments like <a href=\"https:\/\/www.tatacapital.com\/blog\/loan-for-home\/fractionl-ownership-of-real-estate-assets\/\">Real Estate Investment Trusts (REITs)<\/a> and Infrastructure Investment Trusts (INVITs).&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Variants with\u00a0 different investment structures<\/strong><\/h2>\n\n\n\n<p><strong>Multi-asset allocation fund<\/strong> variants include the following,<\/p>\n\n\n\n<ol start=\"1\">\n<li>Regular <strong>multi-asset fund<\/strong>s invest directly in different asset classes<\/li>\n\n\n\n<li><strong>Multi-asset funds<\/strong> of funds (FoFs) invest in other mutual funds and ETFs, such as gold ETFs, equity funds and bond funds<\/li>\n<\/ol>\n\n\n\n<p>Besides, <strong>multi-asset fund<\/strong>s can be actively or passively managed. Here\u2019s how they both differ:<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Criteria<\/strong><\/td><td><strong>Actively Managed Funds<\/strong><\/td><td><strong>Passively Managed Funds<\/strong><\/td><\/tr><tr><td>Fund manager\u2019s approach<\/td><td>Active decision making in allocation and asset selection.<\/td><td>Relies on predefined indices and criteria.<\/td><\/tr><tr><td>Investments<\/td><td>Direct stocks, bonds and commodities.<\/td><td>Strong presence of ETFs and index funds in AUM.<\/td><\/tr><tr><td>Objective<\/td><td>Outperform market performance.<\/td><td>Track and achieve market or index performance.<\/td><\/tr><tr><td>Complexity<\/td><td>High complexity due to fund manager decisions and strategy.<\/td><td>Simpler and transparent due to a rule-based approach.<\/td><\/tr><tr><td>Cost<\/td><td>Higher expense ratio due to active fund manager involvement.<\/td><td>Low cost but fund of funds layer can escalate costs.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Apart from these variants, the emergence of omni <strong>multi-asset funds<\/strong> has added a new dimension to this fund category. These funds invest in multiple asset classes, and while doing so, they choose active as well as passive ETF, index or regular fund schemes. Such schemes may be chosen from different AMCs (Asset Management Companies).<\/p>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/how-to-diversify-mutual-fund-portfolio\/\">How many mutual funds should you hold?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why invest in multi-asset allocation funds?<\/strong><\/h2>\n\n\n\n<p>The FoF layering and varied management style mean that <strong>multi-asset allocation fund<\/strong>s have become a rapidly evolving segment. This has garnered significant investor attention as well. The Association of Mutual Funds in India (AMFI) has observed that <strong>multi-asset fund<\/strong>s are gaining popularity in recent months. The total Asset Under Management (AUM) in this fund category stands at around Rs. 1.83 lakh crore, spread across 49.1 lakh folios. In February 2026 alone, the <strong>best<\/strong> <strong>multi-asset allocation fund<\/strong>s saw a net inflow of \u20b98,500 crores.<\/p>\n\n\n\n<ul>\n<li><strong>Fund variants:<\/strong> The option of different variants in <strong>multi-asset allocation fund<\/strong>s means investors get exposure to both actively and passively managed funds with a single investment.<\/li>\n\n\n\n<li><strong>Combined expertise:<\/strong> The composite structure of these funds combines the expertise of multiple fund managers. Switches between managers and asset classes do not attract any tax liability either.<\/li>\n\n\n\n<li><strong>Diversification:<\/strong> Its diversification across different asset classes ensures that the fund &nbsp;helps reduce overall portfolio volatility, though it does not eliminate market risk.It can balance risk and return to grab opportunities across different market cycles.<\/li>\n\n\n\n<li><strong>Investor preference:<\/strong> More investors prefer all-weather portfolios that are not dependent on one asset class. They get long-term wealth creation through risk-adjusted <strong>multi-asset fund returns<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/alternate-investment-fund-types-features-benefits-of-aif\/\">What Are Alternate Investment Funds?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Wrap up<\/strong><\/h2>\n\n\n\n<p>The popularity of <strong>multi-asset allocation funds<\/strong> indicates a shift in investor preference towards risk-balanced diversification over market timing. The emergence of sophisticated scheme variants, from actively managed schemes to passive options and omni multi-asset FoFs, continues to accelerate this popularity further.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Summary A multi-asset allocation fund blends diverse asset classes into a single portfolio. Multi-asset funds provide risk-adjusted returns that are vital for long-term wealth creation. It gives investors exposure to equity, debt, international, commodities, indices, ETFs, etc., through a single fund scheme. These funds are now available in a variety of sub-categories, including FoFs, which [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":53506,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[37],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Multi Asset Funds Explained: Types, Returns &amp; Benefits | Tata Capital<\/title>\n<meta name=\"description\" content=\"Learn how multi asset funds invest across equity, debt, gold and global assets to deliver diversified, risk-adjusted long-term returns.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Multi Asset 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