Multi-asset funds saw an inflow of ₹7,425.98 crore in December 2025 as investors looked for safety amid market swings. Weak equity performance made gold and debt allocations useful in limiting losses. The diversification across asset classes enabled multi-asset funds to perform better than many pure equity and traditional hybrid strategies during periods of uncertainty.
In this article, we explore what multi-asset allocation mutual funds are, key factors to consider before investing, and the best options for 2026.
What are multi-asset allocation mutual funds?
A multi-asset fund invests in different asset classes like equity, debt, and commodities. It diversifies the risk arising from the bad performance of any one particular asset category. According to the Association of Mutual Funds in India (AMFI), a mutual fund must invest in at least three distinct asset classes, and a minimum of 10% allocation in each class to be considered a multi-asset allocation mutual fund.
Multi-asset allocation funds are useful for inexperienced investors and those with limited funds. They provide exposure to multiple asset classes, without the need to hold each asset individually. To better grasp the concept of multi-asset allocation mutual funds, it is important to understand some industry-specific factors.
Factors to consider before choosing the best multi-asset mutual funds
When we use category-specific metrics with our research, we discover more in-depth knowledge that helps us assess the funds and plan out investments accordingly. Therefore, discussed below are some parameters that might aid in exploring the best multi-asset mutual funds.
- Category performance: The top five multi-asset allocation mutual funds have generated an average return of around 21% in the last year. If we look at long-term yearly averages, we might get more insights for our investment research. The given table discusses the yearly category performance of the top five multi-asset allocation funds by their fund size.
| Tenure (years) | Average returns of top 5 funds (%) |
| 3 | 20-22% |
| 5 | 15-17% |
| 10 | 12-14% |
While the performance has slightly increased in the three-year period, it has gone down in the five-year and ten-year periods.
- Category risk: It is essential to compare the risk metrics of the category, as it helps in matching the investment to the risk profile. The level of investment risk must be within the risk appetite of the investor. As of December 31, 2025, the risk metrics of the multi-asset allocation category are as follows.
| Particulars | 3 years (%) | 5 years (%) | 10 years (%) | 15 years (%) |
| Standard Deviation | 7.6450 | 8.2936 | 10.2536 | 9.3741 |
| Sharpe ratio | 1.4771 | 1.2925 | 0.7200 | 0.4818 |
| Sortino ratio | 2.9316 | 2.6016 | 1.1598 | 0.7695 |
Top 5 Multi-Asset Funds
Based on asset under management (AUM), the top five multi-asset mutual funds as of January 16, 2026, are:
| Fund Name | ICICI Prudential Multi-Asset Fund | SBI Multi Asset Allocation Fund | Kotak Multi Asset Allocation Fund | Nippon India Multi Asset Allocation Fund | UTI Multi Asset Allocation Fund |
| Category | Multi Asset Allocation | Multi Asset Allocation | Multi Asset Allocation | Multi Asset Allocation | Multi Asset Allocation |
| Fund Size (₹ crore) | 78,179 | 13,033 | 10,836 | 10,661 | 6,720 |
| Risk | Very High | Very High | Very High | Very High | Very High |
| Expense Ratio | 0.64 | 0.59 | 0.50 | 0.26 | 0.57 |
| Debt Holding (%) | 11.84 | 35.36 | 7.95 | 17.96 | 10.32 |
| Equity Holding (%) | 63.52 | 39.75 | 68.07 | 59.56 | 64.58 |
| 3-Year Returns (%) | 20.28 | 19.53 | – | 22.48 | 21.47% |
| Standard Deviation | 6.64 | 6.68 | – | 7.35 | 8.31 |
| Alpha | 6.75 | 5.90 | – | 7.43 | 5.73 |
| Beta | 0.69 | 0.70 | – | 0.80 | 0.90 |
| Sharpe Ratio | 1.92 | 1.80 | – | 1.96 | 1.64 |
| Sortino Ratio | 2.92 | 2.99 | – | 2.80 | 2.25 |
The major highlights and analysis of these funds are discussed below.
- ICICI Prudential Multi-Asset Fund: This scheme has the highest AUM, showcasing investors’ confidence and high liquidity. The Sharpe and Sortino ratios of 1.92 and 2.92 reflect one of the highest risk-adjusted returns, and the equity allocation of 63% strikes a balance between growth and risk. The standard deviation suggests manageable volatility as per the category.
- SBI Multi-Asset Allocation Fund: The huge debt allocation and the smallest equity portion might have been the factors that led to the lowest returns among the group. The alpha (6.75) and the smallest beta of 0.69 point towards good returns and lower volatility. The risk-adjusted returns are also good, indicated by the high Sharpe and Sortino ratios.
- Kotak Multi-Asset Allocation Fund: The scheme has the highest equity allocation in its category and maintains a low expense ratio of 0.50%. Since it was launched in September 2023, metrics such as three-year returns, standard deviation, alpha, and beta are not yet available.
- Nippon India Multi-Asset Allocation: The lowest expense ratio and debt-equity allocation make this fund a very good option for investors seeking to invest with a balanced approach. The highest alpha reflects exceptional performance, and Sharpe and Sortino show good risk-adjusted returns.
- UTI Multi-Asset Allocation: Even with the smallest fund size, this fund is delivering the second-highest returns. The fund leans more towards equity, and the highest standard deviation shows its volatile nature. The beta of 0.90 adds to this point. Also, the Sharpe and Sortino show lesser risk-adjusted returns, meaning the fund delivers good results but is more exposed to market downturns.
Bottomline
Multi-asset mutual funds invest in several asset classes, which helps decrease dependency on one type of investment. Such a strategy contributes to portfolio diversification and smoothens the risk across market conditions. Of course, not all multi-asset funds are equal. It is a good practice to compare different funds in terms of their yield, volatility, and other key variables while choosing an investment.
FAQ’s
Those funds that invest in a variety of assets like commodities, equity shares, and bonds are known as multi-asset mutual funds. According to AMFI, these funds have to allocate a minimum of 10% to at least three asset classes to be called a multi-asset mutual fund.
A multi-asset mutual fund invests in a range of assets like gold, equity shares, and bonds. It should invest in a minimum of three different asset categories with an allocation of 10% at least. On the other hand, a multi-cap mutual fund makes investments in a variety of equity shares that differ by their cap size. Both funds are useful for investors looking to diversify their portfolio.
No form of investment is completely risk-free. As an investor, you must conduct your own research and understand the risks associated with an investment before putting your money in it. Only go for investments that fit well within your risk appetite.
The Systematic Investment Plan (SIP) is a method of making an investment. In an SIP, regular payments are made over a period of time. This method is useful for beginners as well as experienced investors and helps in building investment discipline.
A Systematic Withdrawal Plan (SWP) allows investors to receive fixed payouts from their investments. These withdrawals can be adjusted for different time frames as per the investor. This method is especially useful for generating a regular income stream.
There is no single best multi-asset mutual fund, as each has its own strengths and risks. Some funds yield high returns but are more volatile. Other funds give limited but stable returns. You can consider multi-asset allocation from options ICICI, SBI, Kotak, Nippon India Multi, and UTI, based on your individual goals and comfort with risk.
There is no universal better choice. Multicap funds suit investors seeking long-term equity growth, while multi-asset funds suit those prioritising diversification and smoother returns across market cycles.
