Their assets under management (AUM) rose from Rs 1.04 trillion (January 31, 2025) to Rs 1.75 trillion (January 31, 2026), an increase of 68.3 per cent.
Multi-asset allocation funds (MAAFs) have outperformed all other hybrid schemes over the past year, with a category average return of 21 per cent.
Their assets under management (AUM) rose from Rs 1.04 trillion (January 31, 2025) to Rs 1.75 trillion (January 31, 2026), an increase of 68.3 per cent.
Key Points
- Multi-asset allocation funds delivered 21 percent average returns, outperforming all hybrid mutual fund categories last year.
- Category assets under management surged 68.3 per cent to Rs 1.75 trillion between January 2025 and January 2026.
- A strong gold and silver rally, along with steady equity and debt returns, boosted overall fund performance.
- Diversification across equity, debt and commodities reduced volatility and provided multiple drivers of portfolio returns.
- Experts advise investors to temper return expectations and invest via SIPs with five-to-seven-year horizon.
MAAF returns beat hybrid funds
Why MAAFs did well
MAAFs must invest at least 10 per cent of their portfolio in each of three asset classes, typically equity, debt and gold. Some also have exposure to silver.
The category benefited as gold (up more than 70 per cent) and silver (up more than 140 per cent) posted strong gains, while equity (Sensex up 8.9 per cent) and debt delivered steady returns.
AUM rises 68 per cent
Diversified allocation captured the upside while reducing single-asset drawdowns.
"Many multi-asset funds held meaningful equity exposure during a broad equity rally while also keeping allocations to gold, silver and other commodities that outperformed during bouts of uncertainty," says Aparna Shanker, chief investment officer -- equity, The Wealth Company Mutual Fund.
"Gold and silver benefited from global uncertainty and industrial demand.
"Debt contributed through steady accrual.
"Healthy domestic flows supported equities," says Abhishek Tiwari, chief executive officer, PGIM India Asset Management.
Gold, silver drive performance
Over the past year, equities, debt, gold and silver rose at the same time.
"This typically does not happen every year," says Tiwari.
"Anchoring expectations closer to nominal gross domestic product (GDP) growth of about 8-12 per cent annualised, plus some efficiency gains, is prudent," says Shanker.
Diversification reduces investment risk
Built-in diversification across at least three asset classes reduces concentration risk, lowers volatility and makes returns smoother.
These funds do not rely on any single market environment.
"They have exposure to multiple drivers such as corporate earnings via equities, interest-rate cycles via debt and global macro and commodity trends via gold and silver," says Tiwari.
Professional rebalancing curbs emotion-driven decisions.
"Investors get regulated exposure to gold, silver and other instruments within a mutual fund wrapper," says Shanker.
Should investors invest now?
The fund manager decides the asset allocation.
"The product may not align with every investor's specific needs, goals or risk profile," says Alekh Yadav, head of investment products, Sanctum Wealth.
Fund-level shifts can also disrupt an investor's intended asset allocation at the portfolio level.
Many investors believe diversification leads to higher returns.
"It mostly reduces volatility, which can potentially lower returns," says Anand K Rathi, cofounder, MIRA Money.
MAAFs with fund-of-fund structures can have higher expense ratios, which can affect long-term compounding.
Are MAAFs right for you?
These funds suit investors who want a balanced solution across market cycles without constant monitoring.
"Investors seeking a diversified core allocation with equity participation and risk mitigation through debt and commodities can go for them," says Shanker.
Tiwari says they suit first-time investors, moderate-risk investors and long-term savers who value stability.
According to Yadav, investors who want to monitor and precisely control their asset allocation closely may not find MAAFs suitable.
"Investors with a limited time horizon should also avoid these funds," says Rathi.
Existing investors should stay put
Avoid overreacting to the run-up.
"After a strong year, fund managers typically rebalance and trim overweight exposures, so stay invested," says Rathi.
Yadav cautions that expectations should be reset as the strong performance of the past may not get replicated going forward. New investors should not chase past returns.
Rathi suggests that only those who seek risk reduction, stability and disciplined allocation should consider these funds.
They should enter via systematic investment plans, provided they have a horizon of five to seven years.
High returns over past year
AUM as on January 31, 2026.
Returns are of direct plans as on February 19, 2026.
Above one-year returns are annualised.
Source: Value ResearchGet the dataEmbed Created with Datawrapper
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Feature Presentation: Ashish Narsale/Rediff
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