Are investors turning to multi-asset funds for gold and silver exposure?

Investors’ growing interest in Multi-Asset Allocation Funds (MAAFs) has been driven largely by their exposure to gold and other commodities, particularly after gold emerged as one of the strongest-performing asset classes in 2025. In an exclusive interview with Business Today, Adil Chacko, Executive Director, Anand Rathi Wealth Limited, said the category’s popularity was primarily linked to its relatively strong performance, helped by gold exposure.

“In recent times there is a growing popularity of investing in multi asset funds which is primarily due to its relatively strong performance against peers in 2025 which was due to its exposure to gold,” Chacko said.

Gold, silver exposure

Gold benefited from strong central-bank buying, geopolitical tensions and heightened safe-haven demand, while equity markets delivered relatively muted returns in 2025 amid global uncertainties. MAAFs benefited from this trend as they are required to invest in at least three asset classes, with a minimum 10% allocation to each. These typically include equity, debt and commodities such as gold and silver.

Chacko, however, cautioned investors against assuming that commodity exposure will consistently boost returns.

“One should understand commodities like gold & silver tend to undergo cyclical performance and creates higher volatility in the portfolio and most often underperforms the equity asset class in long-term,” he said.

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MAAF inflows vs Balanced Advantage Funds

The strong performance of MAAFs translated into significant investor interest. The category attracted nearly ₹38,027 crore in inflows during January-June 2026, compared with around ₹5,586 crore for Balanced Advantage Funds (BAFs).

Chacko attributed part of this preference to recency bias, with investors tending to favour categories and funds that have recently performed well. MAAFs delivered category-average returns of around 15-17% in 2025, while nearly ₹24,000 crore flowed into the category during the first three months of 2026.

However, gold prices have largely consolidated in recent months, moderating the commodity’s contribution to MAAF returns.

“Recent performance attracted strong investor interest... However, in recent months gold prices have largely consolidated and delivered relatively muted returns. Consequently, the contribution from gold has moderated, leading to comparatively muted performance in Multi Asset Allocation Funds,” Chacko said.

He said the trend highlights why investors should avoid chasing recent returns. “It indicates why one should avoid making investment decisions based solely on recent performance and instead take investment decisions based on long-term financial goals and risk profile,” he said.

MAAF vs BAF

MAAFs and BAFs are both hybrid schemes but follow different asset-allocation strategies. MAAFs diversify across at least three asset classes, while BAFs primarily adjust their allocation dynamically between equity and debt based on market conditions.

Chacko also cautioned that hybrid funds can create duplication for investors who already hold separate equity, debt and gold investments.

“Investors should understand that investing in hybrid funds such as multi asset or balanced advantage funds often creates duplicates and deviates investors' desired asset allocation & investors also loses control over asset allocation,” he said.

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July 2026 performance

The July 2026 performance snapshot shows a mixed but broadly positive picture for Multi-Asset Allocation Funds. Canara Robeco Multi Asset Allocation Fund topped the monthly chart with a 2.71% return, followed by Bajaj Finserv (2.67%), Quantum (2.32%), Axis (2.28%) and UTI (2.26%). Over the one-year period, Kotak Multi Asset Allocation led with 21.59%, followed by Quant at 20.56%, DSP at 19.30% and WhiteOak Capital at 13.48%.

Quant stands out over longer periods, delivering 22.50% over three years, the highest among funds with available data. In terms of since-inception CAGR, DSP leads at 20.07%, followed by Kotak at 19.06% and Aditya Birla Sun Life at 17.87%.

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However, recent performance has been uneven. Several funds posted negative six-month returns, including Quant (-2.99%), Bajaj Finserv (-1.90%) and Sundaram (-2.87%). The data highlights why investors should evaluate multi-asset funds across multiple market cycles rather than relying solely on recent returns.

Multi-Asset Allocation Funds: July 2026 Performance

What should investors do?

Instead of relying solely on hybrid funds, investors could consider building a strategy-based portfolio using separate equity and debt funds, giving them greater control over asset allocation. Within equity, investors can diversify across flexi-cap, multi-cap, market-cap-based and strategy-based categories such as focused, value and dividend-yield funds.

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Before choosing a fund, Chacko said investors should evaluate the underlying investment strategy, risk profile, performance across market cycles, alpha-generation potential, peer performance, expense ratio, taxation and portfolio overlap. The key consideration should be whether a new fund fills a genuine gap in the portfolio or simply duplicates existing exposure.