Mutual funds have been broadly categorised into five categories by a SEBI circular dated October 6, 2017. These broad categories are further subdivided into thirty-six different types of mutual funds based on their unique asset allocation. The range of mutual fund categorisation has made investing in diverse assets possible. However, one unique mutual fund category, called multi-asset allocation mutual funds, aids diverse investing without multiple investments.
This blog explores the best multi-asset mutual funds available in India. However, before exploring these assets, it is important to understand the meaning of the category.
What are multi-asset allocation mutual funds?
Mutual funds that invest in different types of assets, ranging from equity, debt, commodities and much more, are called multi-asset allocation mutual funds. According to SEBI, a multi-asset mutual fund must invest in at least three asset classes with a minimum allocation of 10% in each.
Multi-asset mutual funds aid in diversification without multiple investments. It acutely benefits beginners and inexperienced investors. Moreover, it also makes portfolio diversification with limited funds possible. However, understanding the best-performing multi-asset mutual fund requires consideration of certain category-specific factors.
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Factors to consider before choosing the best multi-asset mutual funds
Complementing individual fund research with category-specific metrics reveals valuable insights into the fund performance and might help to gauge future trends. Therefore, discussed below are some parameters that might aid in exploring the best multi-asset mutual funds.
- Category performance: The category average return of the multi-asset allocation mutual funds is 7.40% in one year. However, an analysis of long-term yearly averages might aid investor research. The table discusses the yearly category performance of multi-asset allocation funds.
| Tenure (years) | Category average returns (%) |
| 3 | 17.15 |
| 5 | 17.93 |
| 10 | 10.01 |
Therefore, while the category performance has increased in the three-year and five-year period, it has diminished in ten years.
- Category risk: Comparing the risk metrics of the category with the fund is crucial. It helps in determining the risk profile of the investment. The degree of investment risk must be within the risk appetite of the investor. Discussed below are the yearly category risk metrics.
| Particulars | 3 years (%) | 5 years (%) | 10 years (%) | 15 years (%) |
| Standard deviation | 8.6031 | 9.4834 | 10.2582 | 9.2384 |
| Sharpe ratio | 1.1747 | 1.4472 | 0.6116 | 0.4847 |
| Sortino ratio | 2.2403 | 3.2154 | 0.9739 | 0.7805 |
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5 best performing multi-asset funds
The best multi-asset mutual funds as of 28 June 2025, based on their asset under management (AUM), are discussed in this section. All the funds are direct growth funds.
| Particulars | ICICI Prudential Multi-Asset | SBI Multi-Asset Allocation | Kotak Multi-Asset Allocation | Nippon India Multi-Asset Allocation | UTI Multi-Asset Allocation |
| AUM (₹ crores) | 59,452.32 | 8,395.03 | 7,947.03 | 5,980.56 | 5,659.43 |
| Risk (₹) | Very high | Very high | Very high | Very high | Very high |
| Expense Ratio | 0.67 | 0.58 | 0.44 | 0.25 | 0.60 |
| Debt holding (%) | 14.24 | 37.75 | 10.07 | 12.22 | 16.59 |
| Equity holding (%) | 52.27 | 42.27 | 69.92 | 66.7 | 61.5 |
| Sharpe Ratio (%) | 1.71 | 1.39 | – | 1.38 | 1.52 |
| Standard Deviation (%) | 7.58 | 7.40 | – | 8.77 | 8.93 |
| Sortino Ratio (%) | 2.93 | 2.37 | – | 2.43 | 2.17 |
| 3-year return (%) | 23.00 | 19.56 | – | 21.66 | 23.43 |
The highlights and analysis of the best multi-asset mutual funds are discussed below.
- ICICI Prudential Multi-Asset: High liquidity and investor trust are generally indicated by the high AUM. Among the top-performing multi-asset funds, the ICICI fund offers the highest risk-adjusted returns. The Sortino and Sharpe ratios are indicative of it. The sizable but not the largest equity allocation strikes a balance between risk and growth. The modest standard deviation suggests managed volatility for the high-risk category.
- SBI Multi-Asset Allocation: The high debt and the least amount of equity exposure might have caused the lowest 3-year return and the least degree of volatility. This indicates that its profits may not be commensurate with the risk involved. Its alpha (4.05) is greater than the industry average of 2.92, but its beta (0.70) is lower than the category average of 0.75. Compared to the benchmark, the alpha-beta combination exhibits a better return and less volatility.
- Kotak Multi-Asset Allocation: This fund offers some intriguing insights, as it has one of the largest equity investments and the lowest expense ratio. Its portfolio allocation in the large and small-cap companies exceeds the category. However, it is below the category average for mid-cap and giant-cap stocks. Since the fund was only established in September 2023, some metrics are not available.
- Nippon India Multi-Asset Allocation: This fund has the second-highest standard deviation and equity allocation. This, along with a standard deviation that exceeds the category average, might indicate volatility. Since its launch, the fund has provided a return of 18.95%. Moreover, its 3-year return average is higher than the benchmark.
- UTI Multi-Asset Allocation: With a balance of debt and equity that leans more toward equity, the UTI fund yields the best three-year return among the best multi-asset funds. Among its peers on the list, the fund shows the most market-related volatility. At 0.86, its beta is also higher than the category average, reinstating the previous point.
Also read: What is Systematic Withdrawal Plan (SWP) in Mutual Fund
Bottomline
Multi-asset mutual funds can help investors diversify across various asset categories, resulting in risk mitigation of the overall portfolio. Moreover, often individual investors face difficulty in diversifying their portfolios due to limited funds. However, with multi-asset mutual funds, investors can get the benefit of diversification with one investment. Despite its benefits, like any mutual fund investment, optimum investor research on the category and specific funds is integral to a successful investment.
FAQs
Multi-asset allocation mutual funds are those that invest in a variety of assets, including debt, equities, commodities, and much more. A multi-asset mutual fund is required by SEBI to allocate a minimum of 10% to each of the three asset classes it invests in. It aids in diversification and optimum asset allocation.
While multi-asset mutual funds invest in a range of different assets, multi-cap mutual funds invest in a range of companies which differ in size. Both multi-cap and multi-asset mutual funds aid in diversification and asset allocation. Often, individual investors face difficulty in diversifying their portfolios due to limited funds. However, with multi-asset mutual funds, investors can get the benefit of diversification with one investment
Every investment has a degree of risk attached to it. Optimum investor research about the category performance and fund-specific metrics can aid in decision-making. Complementing individual fund research with category-specific metrics reveals valuable insights into the fund performance and might help to gauge future trends. Moreover, investors should take risks within their risk appetite.
The Systematic Investment Plan is a method of investing in mutual funds. It allows regular investment of a fixed sum at periodic intervals for a particular tenure. For instance, X can invest ₹ 1,000 in a debt mutual fund monthly for 5 years. It uses the law of compounding and rupee cost averaging to mitigate market volatility and deliver returns. Moreover, it also makes the process of investing simple and disciplined.
A Systematic Withdrawal Plan (SWP) is a financial technique in which investors take out a fixed sum of money yearly, weekly, or monthly from their mutual fund assets. This enables investors to retain some of their money invested and maybe increase it while still receiving a consistent income stream from their assets. Like SIP, SWP is a method of making mutual fund investments that can generate passive income while providing capital appreciation if planned optimally.
