Can multi-asset funds balance risk and returns?

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Subscribe to enjoy similar stories. MUMBAI : Multi-asset funds work on the principle that by investing across different asset classes, investors can reduce volatility and optimize their returns, as at least one asset class is likely to do better than others in a given economic cycle. But can multi-asset portfolios work in Indian markets.

Here is a look at the numbers. Over the past one-year period, amid weakness in stock markets, multi-asset funds as a category have delivered average returns of 9.2%. Within the category, certain multi-asset funds have delivered higher returns.

The stock market benchmark Nifty 50 has fetched a little over 2.6% in the same period. On a five-year rolling basis, multi-asset funds have delivered returns of 13% on an average between 21 February 2020 and 21 February 2025. Five-year rolling returns are simply five-year returns rolled daily between the above-mentioned dates.

The same analysis shows that multi-asset funds have delivered a maximum of 30% five-year returns; the minimum is 1%. The funds showed a standard deviation (measures volatility) of 4% on an average. An analysis done by WhiteOak Capital MF of three-year rolling returns between January 2001 and December 2024, showed that a 100% debt portfolio delivered annualized returns of 6.3% on an average, with standard deviation (volatility) of 3%; a sample of 75% debt-25% equity portfolio delivered 3-year rolling returns of 9.3%, with standard deviation of 2.9% and a 60% debt-20% equity-20% gold portfolio delivered returns of 10.2%, with standard deviation of 2.9%.