Multi-asset allocation funds have emerged as the clear standouts within the hybrid schemes category over the past year, helped by a powerful rally in gold and silver and the flexibility to shift between asset classes as market conditions change.
Hybrid schemes include balanced hybrid, arbitrage, balanced advantage, equity savings and aggressive hybrid.
On a one-year basis, 360 ONE Multi Asset Allocation Fund led the pack with a 27.1% return, followed by Kotak Multi Asset Allocation Fund (22.2%), Quant Multi Asset Allocation Fund (21.2%) and DSP Multi Asset Allocation Fund (20.7%), showed data by Value Research. Mint has considered only direct plans for this analysis, meaning investors buy directly from the fund house without an intermediary, so there is no distributor commission and the expense ratio is typically lower.
The outperformance becomes clearer when multi-asset funds are stacked up against some of the top-performing schemes in other hybrid categories. Aggressive hybrid funds such as Bank of India Mid & Small Cap Equity & Debt Fund and Quant Aggressive Hybrid Fund delivered 14.9% and 12.3%, respectively. HSBC Equity Savings Fund returned 9.6%, while Balanced Advantage funds Baroda BNP Paribas Balanced Advantage Fund and Aditya Birla Sun Life Balanced Advantage Fund gained 9.2% and 8.7%, respectively. Quant Arbitrage Fund returned 7.7%, Value Research data showed.
According to Anthony Heredia, managing director and chief executive officer of Mahindra Manulife Mutual Fund, “Most of the outperformance has been driven by exposure to gold and silver as well as tactical increase or decrease in allocations into equities”.
Commodity boost
Hari Shyamsunder, vice president & senior institutional portfolio manager – India equities, Templeton Global Investments, also feels the recent outperformance is because their return and risk are not tied to equities alone. He added that gold and silver prices have rallied strongly, while debt has provided carry and stability during muted broad-market equity returns.
Besides, some believe that even when markets remain range-bound, short-term swings can create opportunities for nimble multi-asset funds to tweak allocations and generate better returns. They also caution against recency bias, where investors tend to chase recent winners. By rebalancing across equities, gold, silver and debt as market leadership shifts, multi-asset funds can make volatility work in their favour rather than simply ride it out.
Over the past one year, Nifty 50 has fallen more than 2%
Flows cool
On the other hand, it appears that the gush of money into multi-asset allocation funds has begun to lose steam. After peaking at ₹10,485.38 crore in December 2025, net inflows into the category have steadily cooled, easing to ₹3,753.38 crore in July 2026, according to AMFI data.
To that, Shyamsunder explained that the flow surge around the turn of the year was helped by strong previous commodity returns which made the benefits of diversification more visible. As momentum in commodity prices faded and parts of the equity market recovered, flows have moderated. That said, he believes Multi asset fund returns need not fall along with metals since equity and debt cushions the weakness.
Gold has posted a 60% return over the past year, while silver has soared 108.5% during the same period.
But Heredia feels that the fact that these funds invest across asset classes can give investors more confidence to stay invested for the long term, as a dip in one asset class is often offset by stronger returns from another.
What’s more, Heredia pointed out that a part of the moderation in flows reflects a broader dip in industry-wide flows into equity and hybrid funds in recent months.
The equity-fund money rush in India has started to cool. Net inflows into Indian equity mutual funds, which surged to ₹42,672.63 crore in July 2025, eased to ₹28,034.81 crore in December and further tapered to ₹24,685.47 crore by July 2026.
What’s the right yardstick?
Market participants think a customized benchmark makes more sense for multi-asset funds, combining a broad-based equity index with bonds, gold and silver. Comparing these funds simply with the Nifty 50, they say, does not give a complete picture of their performance.
At Kotak AMC, the benchmark reflects the multi-asset playbook - 65% in the Nifty 500, 10% in gold and silver, and the remaining 25% in debt, including InvITs, said Devender Singhal, senior equity fund manager at Kotak Mahindra AMC. He pointed out that Reits form a part of equity allocation.
Singhal believes the ability to move between asset classes could help multi-asset funds deliver better risk-adjusted returns than pure-play equity funds. Many such funds have beaten the Nifty 50 in the past but having said that, he sees them as a better fit for moderate to aggressive investors, rather than conservative ones.
According to Shyamsunder, the yardstick for multi-asset allocation funds should be a blended benchmark, and not the Nifty 50 alone since the risk and return profile is different from that of a pure equity fund.
“For example, Franklin India Multi Asset Allocation Fund’s benchmark is 65% Nifty 500, 20% short-duration debt and 5% each in gold, silver and a broad commodity index.”