31-07-2025
Maximize Your Returns: Can multi-asset funds outperform traditional equity investments?
Mumbai: You don't need to go all in on equities to earn competitive returns. A multi-asset diversified portfolio of equity, debt and gold -50:25:25 - would have delivered the second-best returns in seven of the past 10 years, while keeping volatility in check, according to a
Franklin Templeton
study. Investors looking to bet on this outcome could consider
multi-asset funds
.
Between 2016 and 2025, equity (Nifty 500 Total Returns Index or TRI) delivered an average return of 14.8%, gold returned 14.7%, and debt (Crisil Composite Bond Index) gave 7.38% every year. In comparison, a multi-asset portfolio with 50% in equity, along with 25% each in debt, and gold generated an average return of 13.6%, with significantly lower volatility.
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"Over a long period of time, multi asset funds have the potential to give you equity-like returns with better consistency and lower volatility," says Rajasa K, VP & portfolio manager - emerging market equities, Franklin Templeton India.
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Multi-asset funds invest in a mix of equity, debt, and commodities like gold and silver. They aim to deliver ease from the volatility linked to plain vanilla equity funds.
Agencies
This category is in vogue because of elevated share valuations, resulting in more investors putting money in these schemes. 'Equities are trading above long term averages and if that is the only asset you hold, one could end up with tepid returns,' says S Shankar, certified financial planner, Credo Capital.
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Shankar believes multi asset funds — which include gold, silver, and debt — can cushion potential declines in equities. Assets under management in multi asset funds rose 51% over the past year — from Rs 86,000 crore in June 2024 to Rs 1.3 lakh crore in June 2025. Fund managers also point to the
tax efficiency
of these products as a key draw for wealthy investors.
'Multi asset funds give you the benefits of asset class rebalancing and tax efficiency,' says Rajasa. If investors were to invest separately in gold, equity, and debt and rebalance the portfolio every year, the resulting tax outgo could be significantly higher, denting overall post-tax returns. Multi-Asset Allocation funds, as a product category, are taxed on the basis of the equity allocation.
