Surge in multi-asset AUM
Over the past three years, AUM in multi-asset funds jumped to ₹2.07 lakh crore, a 487% increase, compared with a 115% rise for flexi-cap funds. The shift reflects investor demand for simplified diversification and risk management in uncertain markets.
What is driving the shift
Multi-asset funds combine equities, debt and sometimes cash or other instruments into a single vehicle, offering a one-stop solution for risk control and diversified exposure. Their growth has been supported by rising investor awareness and product innovation that blurs the line between pure equity and blended funds.
Key factors to consider before choosing
- Risk tolerance and horizon: Multi-asset products usually aim for a smoother profile, while flexi-cap funds chase growth with higher volatility.
- Diversification benefits: The mix of asset classes and the correlation between them can cushion drawdowns in equity markets.
- Costs and taxation: Expense ratios, tax treatment of fund income, and redemption policies can affect net returns.
- Flexibility and dynamics: Active rebalancing within multi-asset funds can lead to different risk outcomes compared with fixed allocations.
- Core-satellite approach: Many investors use multi-asset as the core sleeve while adding flexi-cap or other equity funds as satellites to tilt exposure.
One or both: how to decide
- Use as a core holding: If you prefer a simple, diversified core, a multi-asset fund can serve as the backbone of your portfolio.
- Add equity tilt if needed: If your goal is higher growth and you want to fine-tune exposure, keep flexi-cap funds alongside for opportunistic bets on equities.
- Align with goals and risk: Your decision should reflect tolerance for risk, investment objectives, and whether you want to actively manage asset allocation.
Bottom line: The strong AUM growth in multi-asset funds signals investor appetite for blended portfolios. A thoughtful mix—using multi-asset as a core plus selective flexi-cap positions—can offer diversification and growth potential without overexposing a portfolio to single-asset risk.
