Gold boosts multi-asset funds

These funds help reduce portfolio concentration risk and cushion market volatility

- SAIKAT NEOGI

The sharp rally in gold prices has acted as a strong performance cushion for multi-asset funds during periods of market volatility. These funds help reduce portfolio concentration risk while ensuring participation across asset classes.

For moderate-risk investors, these funds serve as a middle path between aggressive equity funds and conservative debt options. Investors should maintain a three-to five-year horizon and expect returns in the range of 9-11%, with a smoother ride quality compared to pure equity funds. The strategy should be to invest systematically and avoid timing individual asset classes.

Nirav Karkera, head, research, Fisdom, says as global uncertainties, geopolitical tensions, and central bank policies drove up demand for gold as a safe-haven asset, funds with a meaningful allocation to gold were able to offset the drag from equities. "This diversification benefit allowed multi-asset funds to deliver more stable returns, helping investors ride through equity corrections with lower overall portfolio risk."