Multi-Asset Funds: A Comprehensive Solution For Diversified Investing

The Indian mutual fund industry has experienced remarkable growth, mirroring the nation's economic expansion and the corresponding transition of savings into financial assets.

- Santosh Joseph

As of March 31, 2024, data published by the Association of Mutual Funds in India (AMFI) shows more than a twofold increase in the assets under management over the past five years with AUM surging from *23.80 lakh crore to 53.40 lakh crore. Among the myriad investment avenues tailored to diverse risk appetites and financial objectives, multi-asset allocation (MAA) funds have emerged as a compelling choice, poised to potentially dominate the market in the coming years.

Understanding Multi-Asset Allocation Funds

A type of hybrid funds, multi-asset allocation funds represent a category of mutual funds that invest across a spectrum of asset classes. Unlike equity funds or debt funds, which concentrate on a single asset class, MAA funds diversify their investments across equities, debt instruments, international equities, and commodities such as gold and silver. The Securities and Exchange Board of India (SEBI) mandates that MAA funds should allocate at least 10 per cent of their corpus across three different asset classes. This diversification forms the bedrock of MAA funds, offering investors several advantages.

Advantages