Multi-asset allocation funds have quietly emerged as strong performers over the past year, especially at a time when markets have seen sharp swings across equity categories. The multi-asset allocation funds category has delivered an average return of around 20% over the past year.
As the name suggests, these funds invest across multiple asset classes — typically equities, debt, and commodities like gold — aiming to balance risk and returns within a single portfolio. For investors, the biggest appeal lies in diversification, automatic asset rebalancing, and relatively smoother journeys compared to pure equity funds.
Over the last one year, a few multi-asset allocation funds (direct plans) have not only delivered impressive returns but have also done so with low expense ratios, making them attractive from a cost-efficiency perspective.
Here’s a closer look at three such funds that topped the one-year return charts.
Kotak Multi Asset Allocation Fund (Direct)
1-year return: 29.35%
Expense ratio: 0.50%
Kotak Multi Asset Allocation Fund – Direct Plan – Growth has emerged as the top performer in the category over the past year. Launched in September 2023, the fund has delivered 24.19% returns since inception, despite its relatively short track record.
What works in its favour is a well-balanced asset allocation strategy. The fund’s benchmark combines NIFTY 500 TRI (65%) for broad-based equity exposure, short-duration debt (25%) for stability, and gold and silver (5% each) as hedges against inflation and volatility. Classified under Very High risk, the fund is suitable for investors with a higher risk appetite looking for diversification beyond pure equity.
On the portfolio side, the fund shows a clear tilt towards growth and consumption-led sectors. Financials (17.24%) form the largest allocation, followed by an overweight position in technology (14.39%). Meaningful exposure to consumer discretionary (12.44%), along with defensiveness from consumer staples (8.43%) and energy & utilities (8.34%), helps balance growth and stability. With assets of ₹10,836 crore, the fund has also gained strong investor acceptance.
DSP Multi Asset Allocation Fund (Direct)
1-year return: 27.96%
Expense ratio: 0.27%
DSP Multi Asset Allocation Fund – Direct Plan – Growth stands out for combining strong performance with one of the lowest expense ratios in the category. Launched in September 2023, the fund has delivered 23.82% returns since launch and manages assets worth ₹6,440 crore.
This fund takes a distinctly global approach to multi-asset investing. Its benchmark includes Indian equities (NIFTY 500 TRI – 40%), global equities (MSCI World – 20%), debt (20%), gold (15%), and a small allocation to commodities (5%). This structure makes it suitable for investors seeking geographic and asset-class diversification within a single fund.
Sector-wise, the equity portfolio is evenly balanced. Financials (14.92%) remain the largest exposure, while technology (13.68%) is meaningfully overweight compared to the category average, reflecting confidence in global and domestic IT themes. Allocations to consumer discretionary, materials, and energy & utilities help spread risk across economic cycles. The fund’s 0.27% expense ratio significantly enhances net returns, especially over longer periods.
Invesco India Multi Asset Allocation Fund (Direct)
1-year return: 25.35%
Expense ratio: 0.51%
Invesco India Multicap Fund – Direct Plan – Growth is the youngest of the three, having been launched in December 2024. Despite its short history, the fund has delivered 22.29% returns since inception, supported by a clearly defined and relatively conservative asset mix.
Its benchmark leans more towards large-cap equities (NIFTY 200 TRI – 60%), complemented by government bonds (CRISIL 10-Year Gilt – 30%), and gold and silver (5% each). This structure makes the fund slightly more defensive compared to peers, even though it is still classified as Very High risk.
The equity portfolio reflects this cautious positioning. Financials (16.94%) dominate the sector allocation, while technology exposure (7.21%) is lower than the category average. Moderate allocations to energy & utilities, consumer discretionary, and industrials suggest a preference for stability over aggressive cyclical bets. With assets of ₹686 crore, the fund is smaller in size, which partly explains its relatively higher expense ratio.
Why multi-asset funds are gaining traction
Multi-asset allocation funds are increasingly appealing because they reduce dependence on a single asset class. When equities are volatile, debt and gold can provide stability; when equities perform well, they drive returns. These funds also handle rebalancing internally, which many retail investors struggle to do on their own.
However, investors should be mindful of the risks. Being classified under Very High risk, returns can fluctuate sharply in the short term. Performance also depends heavily on the fund manager’s asset allocation calls.
For investors with a medium- to long-term horizon, these three funds show how low costs combined with smart diversification can deliver strong results — especially in uncertain market conditions.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.