Investor flows into multi-asset funds surge in December 2025: Did gold and silver play a role?

Multi-asset allocation funds recorded a sharp surge in investor inflows in December, underscoring growing demand for diversified investment strategies amid volatile equity markets. Inflows into the category jumped 40% month-on-month to Rs 7,425 crore, compared with Rs 5,314 crore in November 2025. On a year-on-year basis, inflows rose 188% from Rs 2,574 crore in December 2024, according to industry data.

The sharp rise has been largely driven by strong performance in gold and silver, which outpaced equities during the period and lifted returns for multi-asset funds with allocations to precious metals. This relative outperformance has drawn increased participation from both retail and institutional investors seeking alternatives to pure equity exposure, particularly at a time when market volatility and global uncertainty remain elevated.

Market participants said multi-asset funds have benefited from performance-led inflows, as exposure to gold and silver helped them outperform several equity fund categories. This has triggered return-chasing behaviour among some investors amid fear of missing out. At the same time, for more passive investors, multi-asset allocation funds are increasingly being viewed as “all-season” products, offering built-in diversification across equities, fixed income and precious metals within a single portfolio.

Arjun Guha Thakurta, Executive Director at Anand Rathi Wealth Limited, said the December surge highlights a broader shift in investor behaviour. “The 40% jump in December inflows into gold- and silver-backed multi-asset allocation funds shows that investors are actively increasing exposure to other asset classes and recognising the importance of diversification in the current market environment,” he said. According to him, the category attracted total inflows of Rs 47,056 crore in calendar year 2025, with the strongest momentum seen in the last four months among hybrid funds.

Over the past six months alone, investors allocated close to Rs 32,800 crore to multi-asset funds as gold prices moved higher amid global uncertainty and continued central bank buying, while silver benefited from rising industrial demand. This exposure has helped multi-asset funds outperform pure equity benchmarks by around 3–4% compared with the Nifty 50 over the past two years, helping explain the recent surge in interest.

However, Thakurta cautioned that flows into the category are likely to remain closely tied to commodity price trends, particularly gold. “If gold continues to perform well, these funds may remain attractive on a relative basis over the next 12 months. But investors should recognise that this category is cyclical by nature,” he said, adding that over long periods, gold and silver have historically underperformed equities.

From an asset allocation perspective, he advised investors to avoid basing decisions solely on recent inflows or short-term performance. Instead, portfolios should be constructed with clearly defined equity, debt and gold allocations aligned with long-term goals. He suggested maintaining an 80:20 allocation between equity and debt, with gold potentially replacing part of the debt allocation and capped at around 20%.

Multi-asset funds

Performance data for multi-asset funds shows differentiated outcomes across time horizons. In the short term, one-month returns have been driven by equity momentum and gold strength, with funds such as Aditya Birla Sun Life Multi-Asset Omni FoF and its passive counterpart posting gains of around 4.5–5%. Over six months, actively managed and fund-of-funds strategies have outperformed, while more conservative multi-asset schemes have lagged.

Over one-, three- and five-year periods, funds with disciplined rebalancing and dynamic allocation have delivered more consistent results, highlighting that while multi-asset funds can smooth volatility, outcomes ultimately depend on allocation discipline and effective risk management across market cycles.

Overall, recent data suggests that dynamic, actively managed multi-asset funds have outperformed simpler allocation strategies, particularly across medium-to-long timeframes.