Multi asset vs aggressive hybrid funds: Which is better for you in 2026?

The year 2026 has started on a challenging note for equity investors. Markets have seen sharp swings, and a strong sell-off after the Union Budget. The Nifty 50 and Sensex slipped, while the broader market fell even more, hit by a higher Securities Transaction Tax (STT) on F&O trades in the Union Budget. With markets still volatile and gold back in focus, many investors are unsure about going all-in on equities. In this uncertain backdrop, mutual funds like multi-asset allocation and aggressive hybrid funds are emerging as safer and more balanced investment options. But the question is — which fund is better for you in 2026? Multi-asset funds: A portfolio for all seasons Multi-asset allocation funds are funds that invest simultaneously in equity, debt, and gold (and in some cases, silver or other assets). Their aim is to diversify risk rather than relying on a single asset class. Looking at recent performance, this category has surprised investors. In the last 1 year, multi-asset funds have given an average return of 19.42%, the 3-year CAGR has been approximately 18.55% and over 5 years, these funds have managed to deliver a 15.70% CAGR. This return is not only better than inflation but also surpasses many traditional fixed-income options. These strong results have also reflected in investor confidence. According to data from the Association of Mutual Funds in India (AMFI), in December 2025, multi-asset funds received investments of approximately Rs 7,426 crore. The total AUM increased to Rs 1.65 lakh crore. The category recorded a net inflow of over Rs 47,000 crore in the entire calendar year 2025. A major reason for this surge was gold and silver. In 2025, when the equity market was more volatile, gold and silver performed well. Investors felt that multi-asset funds offered a kind of “all-weather portfolio”—where if one asset underperforms, another compensates. Aggressive hybrid funds: A favourite for growth seekers Aggressive hybrid funds are characterized by their 65–80% equity exposure. The remaining portion is invested in debt. This means these funds are quite close to equities, but not entirely dependent on the stock market. However, their performance over the past year has been somewhat lackluster. The average 1-year return was only 7.28%. But if you exercise a little patience, the picture changes. Over 3 years, aggressive hybrid funds delivered a 14.79% CAGR and the 5-year return was approximately 12.89% CAGR. This shows that this category does not disappoint long-term investors, even with short-term fluctuations. Investor interest remains, although not as strong as in multi-asset funds. In December 2025, aggressive hybrid funds saw a net inflow of Rs 1,514 crore and the total AUM was approximately Rs 2.53 lakh crore. However, the entire hybrid fund segment also saw a month-on-month decline of about 19% in inflows in December, indicating that investors are now investing more cautiously. Where does the difference lie in 2026? In 2026, the real difference lies in risk tolerance and investment goals. If you want an investment with fewer shocks, a self-balancing portfolio, and the benefits of assets like gold, then multi-asset funds offer more peace of mind. But if your goal is better long-term growth and you can withstand market volatility, then aggressive hybrid funds might be a better option. What’s better for SIP investors? For SIP investors, this question becomes even more crucial in 2026. Investing in multi-asset funds through SIPs (Systematic Investment Plans) reduces perceived volatility, preventing investors from panicking and stopping their SIPs midway. On the other hand, SIPs in aggressive hybrid funds offer the potential for greater wealth creation in the long term, provided the investor remains patient. The bottom line: The right fund is the one that matches your temperament. In 2026, there is no single fund that is perfect for everyone. If you prioritize stability and diversification, multi-asset funds are a good option. If you are willing to take on a little more risk for growth, aggressive hybrid funds can offer better returns. The real question isn’t which fund is better, but which one is better for you.