BT Explainer: Why investors are shifting to multi asset funds amid market swings

In a world shaken by ongoing wars, sharp equity market swings, and persistent inflation shocks, investing today can feel like navigating a storm. This uncertainty is even more pronounced when you consider that the benchmark Nifty 50 index has remained largely flat over the past year, dampening returns from traditional equity mutual funds. Against this backdrop, investors are increasingly turning to diversified strategies like Multi-Asset Allocation Funds (MAAFs) to manage volatility and generate more stable outcomes.

Recent trends in Indian markets reveal a familiar behavioural pattern: investors tend to embrace diversification only when volatility rises. In the first quarter of 2026, geopolitical tensions and rising crude prices triggered choppy equity markets, pushing investors toward relatively stable, diversified vehicles — Multi-Asset Allocation Funds (MAAFs).

The shift has been sharp. MAAFs recorded a record monthly inflow of ₹10,485 crore in January 2026, while 12-month inflows stood at ₹61,666 crore, marking a ₹25,869 crore year-on-year increase. The appeal is structural — these funds allocate across equity, debt, and commodities (primarily gold), with a minimum 10% exposure to each asset class, as mandated by SEBI.

At their core, MAAFs aim to deliver risk-adjusted returns by dynamically rebalancing portfolios. Fund managers increase equity exposure during bull phases and tilt toward gold or debt during uncertainty. But the current surge also reflects recency bias —gold has rallied sharply, while equities have remained volatile.

“Multi-asset will become the largest category in the investment landscape over the next 10–20 years, offering substantial long-term wealth creation opportunities,” says Sandeep Tandon of Quant Mutual Fund.

The long-term consistency aligns with broader data. A WhiteOak Capital study shows multi-asset portfolios delivered 11.4% annualised returns over 16 years, outperforming the BSE Sensex TRI (10.7%), while avoiding annual losses—highlighting their role in smoothing volatility.

Portfolio strategy

Quant’s latest portfolio activity reflects aggressive reallocation:

> 3 New Additions: Lenskart Solutions, Hindustan Unilever, Reliance Industries

> 1 Full Exit: Wipro (complete exit from a ~3.5% allocation)

> 5 Increased Positions: Including Adani Green, HDFC Bank, Premier Energies, ICICI Prudential AMC, Aurobindo Pharma

> No major stock-level reductions, though gold ETF exposure (Nippon India Gold Bees) was trimmed

> 21 holdings unchanged, indicating selective rather than broad churn

The complete exit from Wipro and redeployment into consumption and new-age themes like Lenskart signals a shift away from IT toward domestic growth and discretionary plays.

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Top holdings

The fund runs a concentrated portfolio of 29 stocks, led by:

HDFC Bank (8.54%)

ICICI Bank (7.12%)

Kotak Mahindra Bank (6.38%)

HDFC Life (5.61%)

Aurobindo Pharma (4.97%)

Sectorally, the portfolio is anchored in:

Banks: 22.0%

Insurance: 5.6%

Pharma: 5.6%

Capital Markets: 5.0%

This tilt underscores a financial-heavy core with cyclical and defensive overlays.

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Role of gold

Gold continues to play a balancing role. After equities weakened post-September 2024, gold delivered ~32% returns in FY25 and ~65% in FY26, offsetting equity drawdowns. This explains persistent allocation, even after marginal trimming.

For investors

Multi-asset funds are not new — but investor behaviour around them is cyclical. The current surge is less about discovery and more about reaction. However, portfolios like Quant’s highlight the real edge: dynamic allocation, tactical rotations, and disciplined diversification. For investors, the takeaway is straightforward — MAAFs work best not as a timing tool, but as a core, all-weather allocation strategy.