Multi-asset allocation funds drew nearly 7 times more inflows than balanced advantage funds in H1 2026; here's why

Multi-asset allocation funds dominated investor preference in the first half of 2026. According to AMFI data, the category attracted net inflows of around ₹38,027 crore during January-June 2026, compared with ₹5,586 crore for balanced advantage funds (or dynamic asset allocation).

Both categories belong to the hybrid-fund universe and are often considered by investors seeking an alternative to pure equity funds.

However, experts say they are designed for different objectives, and recent inflows have been driven more by performance than by product suitability.

Why did multi-asset allocation funds attract higher inflows?

SEBI mandates that multi-asset allocation funds can invest in at least 3 asset classes, with a minimum allocation of 10% to each. On the other hand, balanced advantage funds can dynamically adjust equity and debt allocations from 0% to 100%.

According to Sougata Basu, Founder & CEO, CashRich, the rally in gold and silver played a decisive role in attracting investors.

“Multi-asset funds allowed investors to participate in both equity markets and the sharp rally in precious metals. Balanced advantage funds are designed to dynamically manage equity and debt exposure, so they were never meant to capture returns from gold or silver,” Basu explained.

Apurv Gupta, Founder & CEO, Otto Money, said, “Investors typically chase recent returns. Multi-asset allocation funds significantly outperformed balanced advantage funds over the past year, prompting fresh launches and aggressive distribution, which further boosted inflows.”

Why are inflows different despite a similar number of schemes?

As of 30 June, the industry had 34 multi-asset allocation funds and 36 balanced advantage funds. Yet, experts say the number of schemes alone does not determine inflows.

Basu noted that balanced advantage funds are already a mature category managing a large asset base, where fresh investments are often offset by redemptions from existing investors.

Gupta added that multi-asset allocation remains a relatively newer category, resulting in a higher number of new fund launches over the past year. Strong trailing returns also made these schemes easier for distributors to sell.

Can balanced advantage funds make a comeback?

Experts believe future flows will depend largely on market conditions.

Basu said the recent correction in gold and silver has already narrowed the performance gap between the two categories.

“Precious metals have run hard for two years. No asset class leads forever. Market leadership rotates every cycle, and flows follow with a lag,” he added.

Gupta, however, expects a meaningful revival only if investor enthusiasm for precious metals fades, noting that Indian investors have historically maintained a strong preference for gold.

Which category has delivered better returns?

According to category data shared by Gupta (as of June 30, 2026), multi-asset allocation funds have outperformed balanced advantage funds across all major time periods, largely due to the strong rally in gold and silver in 2025 and greater allocation flexibility.

• 1-year: Multi-asset funds gave 10.67% returns versus 1.23% for balanced advantage funds.
• 3-year CAGR: 16.20% versus 10.94%.
• 5-year CAGR: 15.12% versus 10.01%.

Basu said multi-asset allocation funds have also benefited from exposure to a wider mix of assets such as silver ETFs, overseas equities and REITs. He added that balanced advantage funds are designed to reduce equity exposure during expensive markets, which may limit upside in bull runs but provide better downside protection during volatile phases.

Should investors follow category inflows and what should they check?

Both experts caution against using inflow data as an investment decision-making tool.

Basu said investors should look at different factors depending on the category. Before investing in balanced advantage funds, check:

• Actual equity exposure: Understand how much equity risk the fund is really taking after hedging.
• Investment strategy: See how the fund decides to increase or reduce equity exposure.
• Portfolio changes: Check how frequently the fund changes its asset allocation.

Before investing in multi-asset allocation funds, check:

• Gold and silver allocation: Find out how much the fund has invested in precious metals, as allocations can vary widely.
• Other asset classes: See whether the fund also invests in assets such as overseas equities, REITs or InvITs.

Gupta said investors should evaluate these common parameters before choosing either category:

• Bond quality: Check the quality of bonds in the portfolio and the interest-rate risk they carry.
• Asset-allocation approach: See whether the fund actively changes allocations based on market conditions or follows a fixed strategy.
• Equity exposure: Review the fund's historical equity allocation to understand its risk profile.
• Diversification: Check whether the fund uses assets such as REITs and InvITs to improve diversification.