Best multi-asset allocation funds: Only 4 crossed 15% SIP returns in 3 years; Quant, Nippon India led the category

Only four multi-asset allocation funds have delivered SIP returns of more than 15% over the past three years, with Quant Multi Asset Allocation Fund topping the category at 18.51%. According to AMFI, these schemes invest across at least three asset classes, with a minimum allocation of 10% to each. The assets can include equity, debt, gold, silver and other permitted investments.

The idea is to diversify across asset classes that can perform differently through market cycles. However, diversification does not mean similar returns across schemes. An analysis of multi-asset allocation funds with at least a three-year track record shows a wide variation in SIP returns. Only four funds delivered more than 15% over three years, while the lowest return was 7.52%.

Quant leads three-year SIP returns

Quant Multi Asset Allocation Fund topped the three-year SIP return chart with 18.51%, followed by Nippon India Multi Asset Allocation Fund at 17.64%. WhiteOak Capital Multi Asset Allocation Fund and Aditya Birla Sun Life Multi Asset Allocation Fund were the other two schemes to cross the 15% mark.

Axis Multi Asset Allocation Fund and SBI Multi Asset Allocation Fund delivered almost identical three-year SIP returns at 13.73% and 13.72%, respectively.

Baroda BNP Paribas Multi Asset Fund followed with 12.83%, while ICICI Prudential Multi Asset Fund delivered 11.77%. Tata Multi Asset Allocation Fund and UTI Multi Asset Allocation Fund posted 11.68% and 11.40%, respectively.

At the bottom of the three-year ranking were HDFC Multi-Asset Allocation Fund and Edelweiss Multi Asset Allocation Fund, with SIP returns of 9.90% and 7.52%, respectively.

This means there was a gap of nearly 11 percentage points between the best and worst performers in the three-year comparison. The difference is significant for investors using SIPs because even a seemingly modest difference in annualised returns can materially affect the value accumulated over time.

Five-year SIP returns show a different ranking

Quant again led the five-year SIP return chart, delivering 20.67%, followed by Nippon India at 18.42%.

But three other funds crossed the 15% mark over five years even though their three-year SIP returns were below 15%.

ICICI Prudential Multi Asset Fund is a notable example. Its three-year SIP return was 11.77%, but the five-year figure was 15.49%. SBI Multi Asset Allocation Fund moved from 13.72% over three years to 15.35% over five years, while UTI Multi Asset Allocation Fund went from 11.40% to 15.16%.

Among the other schemes with five-year track records, Tata Multi Asset Allocation Fund delivered 13.68%, Axis Multi Asset Allocation Fund returned 12.95% and HDFC Multi-Asset Allocation Fund posted 12.06%.

Fund size does not guarantee higher returns

The AUM data also shows that the largest schemes were not necessarily the top performers.

ICICI Prudential Multi Asset Fund is the largest scheme in the category, with net assets of ₹86,785 crore. Yet its three-year SIP return was 11.77%, placing it below the category leaders.

SBI Multi Asset Allocation Fund with an AUM of ₹20,240 crore has delivered 13.72% over three years. Nippon India Multi Asset Allocation Fund, with ₹16,926 crore in net assets, was the second-highest performer at 17.64%.

Quant, meanwhile, has net assets of ₹6,356 crore but it has delivered the highest three-year SIP return in the comparison.

This indicates that scheme size alone is not a useful indicator of recent SIP performance. The returns of multi-asset funds can vary depending on how individual schemes allocate money among equity, debt and commodities.

For investors, therefore, the multi-asset label should not be treated as a guarantee of a particular return profile. The asset mix, investment strategy and investment horizon can all influence the eventual outcome.