Over the past few months, flows into the multi asset allocation category have averaged ₹5,000–6,000 crore, even as inflows into traditional equity categories — especially mid- and small-cap funds — have moderated. Sivakumar said the trend reflects a growing understanding of asset allocation among retail investors.
“Multi asset funds have delivered returns in the same ballpark as equity but at much lower risk. For beginners, that combination is very attractive,” he said.According to Sivakumar, first-time investors are increasingly choosing multi asset funds because they offer professional allocation across three or more asset classes. “If you’re starting your investment journey, you may not know which asset class will perform at what point. Multi asset funds take that call for you,” he explained.
Fund managers typically spread investments across equity, fixed income and gold, with at least 10% in each, as per SEBI’s rules. This structure ensures meaningful diversification from day one — a feature that appeals strongly to new investors who prefer a balanced approach over pure equity exposure.Sivakumar noted that the post-Covid years have created a more resilient investor base. Even during periods of market volatility, retail investors have continued their SIPs, unlike earlier cycles where corrections led to widespread cancellations.
“This is the first cycle where we’ve seen an equity culture getting built. Investors are staying put even when near-term returns are not exciting,” he said. The desire for stability, he added, has naturally pushed beginners toward hybrid schemes, where drawdowns tend to be softer.
Another factor aiding the category is the tax treatment of hybrid funds. After the removal of indexation benefits for debt funds, investors have increasingly used multi asset schemes as a substitute for traditional fixed income products. When structured with the required equity threshold, these funds can qualify for equity taxation — which is more favourable for long-term investors.
For many first-time savers who are unsure about which asset class to choose, multi asset funds offer a single-window entry into the markets — with automatic rebalancing and professional oversight.
“New investors don’t need to pick between equities or gold or debt. A multi asset fund gives them all three, along with the comfort of a fund manager making tactical calls,” Sivakumar said.
Watch accompanying video for entire conversation.
