Multi-asset FoFs are multiplying. Do investors really need them?

₹10,485 crore—higher than what any equity category received in the same month.The asset-allocation and diversification argument underpinning multi-asset funds, strengthened by the inclusion of gold and silver as investable components, appears to be driving their rising popularity among investors.But just as investors were getting comfortable with the multi-asset pitch, fund houses have begun multiplying their offerings.Sebi’s 2025 directive on fund-of-funds (FoF) re-categorization appears to have triggered a fresh wave of multi-asset products. But do investors really need this variation of the multi-asset strategy, or does it simply amplify noise in an already crowded market and make choice harder?When Sebi first introduced fund categorization rules in 2018, FoFs were tucked into a residual “Other Schemes” bucket.

Unlike equity, debt or hybrid funds, they had no distinct sub-categories. FoFs are funds that invest in other funds—hence the name “fund of funds”.In 2025, Sebi (Securities and Exchange Board of India) directed fund houses to recategorize their FoF offerings, requiring every FoF scheme to be slotted into a defined category.Fund houses can run three variants per category: an active-only strategy, a passive-only strategy and a combined active-passive strategy (commonly labelled “omni”).The recategorization aimed to provide a clearer framework for these schemes, which previously lacked a well-defined structure.Broad categories were created along the lines of equity, debt and hybrid, each with further sub-categories.