Last Updated on Nov 20, 2025 by Anjali Chourasiya
In India’s dynamic investment landscape, many retail investors face a common challenge: they either concentrate all their wealth in equities, chasing high returns, or they miss opportunities because managing multiple asset classes simultaneously could feel overwhelming.
This is where a multi-asset investing approach comes into play. Multi-asset strategies allow investors to build balanced portfolios that benefit from professional fund management while maintaining diversified exposure across different investment vehicles. In fact, mixing asset classes (such as stocks, bonds, gold, and more) can help to smooth out your investment journey and potentially enhance risk-adjusted long-term returns.
This article explains what multi-asset investing is and why it matters for Indian retail investors today.
Let’s get into it.
Table of Contents
What is Multi-Asset Investing?
Multi-asset investing means spreading your investments across multiple asset classes rather than relying on a single type of asset class. In practice, a multi-asset portfolio might include a mix of stocks, bonds, and commodities, each chosen for its different risk and return characteristics. The idea is that by combining assets that don’t move in perfect sync, the overall portfolio aims for greater relative stability in the long-term growth potential, though outcomes can never be guaranteed.
In fact, a multi-asset mutual fund in India is mandated by the capital markets regulator to invest at least 10% of its corpus in each of three asset classes (equity, debt, and another like gold or silver, or other commodities).
Why a Multi-Asset Approach?
By spreading money across varied assets — stocks (equity), bonds or government schemes (debt/fixed income), gold, real estate and more — an investor seeks to balance risk and reward. If one asset is not doing well, the others can potentially cushion the impact.
You can learn more about the intrinsic relationship between risk and return in investments in this article.
In practice, many Indians are already doing a form of multi-asset investing: for instance, if you have some money in a bank FD, some in PPF, some in gold, and some in an equity mutual fund, you are invested in multiple asset classes. The key difference is doing this in a planned and principle-based way, rather than ad hoc. Multi-asset investing is essentially about “don’t put all your eggs in one basket”, a principle that underlies this strategy.
Why Now?
Several macroeconomic trends have converged to make diversification imperative now. Consider these recent factors:
Market Volatility and Diversification:
Indian equities have delivered strong long-term returns but are prone to sharp corrections and cyclical drawdowns. In recent years, geopolitical shocks, changing interest rate cycles, commodity price swings, and policy reforms have made single-asset investing riskier. These conditions have drawn greater attention to diversification across multiple asset classes that respond differently to market cycles and can help smooth portfolio volatility over time.
Inflation Hedge and Asset Rotation
Gold, silver and other commodities offer natural hedges, while fixed income provides stability. Multi-asset portfolios usually have some allocation to these, which has become more valuable given rupee depreciation and imported inflation.
Professional Management and Dynamic Rebalancing
In accordance with the scheme’s stated investment objective and SEBI guidelines, multi-asset funds use professional managers to dynamically adjust the asset mix based on macro trends, valuations, and investor objectives. This automatic rebalancing lets Indian investors navigate complex market cycles without manually timing entries and exits across asset classes.
Key Assets in a Multi-Asset Portfolio
A multi-asset portfolio typically includes a combination of equities, fixed-income, and commodities. Here are the major components and what they offer:
Equities (Stocks): Equities are the portfolio’s growth engine, offering the potential for higher long-term returns but also the most volatility. Prices can swing sharply in the short term, but over time, equities have helped investors build wealth. For a young investor or someone with a long horizon, equities often form the bulk of the allocation because of their wealth-creation potential, despite the interim ups and downs.
Fixed Income (Bonds & Deposits): Fixed-income investments, such as government bonds, corporate bonds, or bank fixed deposits, can be considered. They generate regular interest income and typically experience much lower price fluctuation than equities. While that return is modest compared to equities, the low volatility of debt is its key benefit.
Gold (Other Precious Metals): Gold holds a special place in Indian investment culture, traditionally regarded as a store of value and a hedge against inflation. In a multi-asset portfolio, gold (and to some extent other precious metals like silver) acts as an insurance of sorts. Historically, gold prices have tended to rise during economic uncertainty, currency depreciation, or high inflation periods, essentially when riskier assets falter. Notably, because gold prices are influenced by global factors and are denominated in USD, holding gold also provides a hedge against rupee depreciation.
On the flip side, gold can also stagnate or correct when risk appetite returns.
Other Assets (Real Estate, etc.): Multi-asset investing can include real estate (through REITs or property investments), commodities like silver or oil, and even international assets or alternative investments. The idea is to introduce additional uncorrelated streams. Real estate, when accessed via REITs, can provide regular income and hedge against inflation. These asset classes may further broaden the diversification. As per defined asset allocation of the scheme, professional multi-asset funds often have the flexibility to add these into the mix for a truly all-weather portfolio.
By combining these varied assets, a multi-asset portfolio harnesses the fact that different asset classes rarely all rise or fall together. That’s the beauty of diversification.
Benefits of Multi-Asset Investing
Multi-asset investing offers several key benefits for retail investors, especially under current conditions:
Diversification and Lower Volatility: The primary benefit is risk reduction through diversification. Though correlations between asset classes may vary over time, the overall volatility is curtailed. If you’re a pure equity or pure gold investor, you take the full hit when that single asset class tumbles, but a diversified portfolio absorbs the impact and may fall less.
Improved Risk-adjusted Returns: By cutting down volatility, multi-asset portfolios may deliver better risk-adjusted returns (measured by metrics like Sharpe ratio) compared to pure equity portfolios. They may not always shoot the lights out in bull markets, but they also avoid extreme downturns, potentially resulting in more stable returns,depending on the market conditions.
Downside Protection (Capital Preservation): The allocation to defensive assets like bonds, cash, or gold provides a safety net that pure equity investors lack. When equities witness a sharp correction (as observed during certain market corrections , e.g.,late 2024), a multi-asset investor’s portfolio may face relatively lower drawdowns because part of it is anchored in assets that hold value or even gain at such times.
Open-Ended Structure: Most multi-asset allocation funds are open-ended, allowing investors to enter or exit at any time. Investors can buy or sell units on any business day at the fund’s daily Net Asset Value (NAV), which is calculated at the close of each trading day.
No Need to Time the Market: Trying to predict which asset class will outperform each year is notoriously difficult. A multi-asset mutual fund simplifies this process by entrusting these tasks to professional fund managers. They handle asset allocation, deciding how much to invest in equities, debt, or gold, and continuously monitor and adjust the mix based on market conditions.
As an investor, this means you get a dynamically managed portfolio that’s always optimally balanced. It essentially outsources the heavy lifting of diversification.
Alignment with Goals: Most people have multiple objectives, such as safety of principal for some funds (emergency or near-term needs), growth for long-term goals, and hedges against inflation. A multi-asset portfolio inherently covers these bases. In the current climate of uncertainty, this holistic balance can provide peace of mind that you’re prepared for different outcomes.
How Can You Start a Multi-Asset Portfolio?
You can build your own diversified portfolio or invest in ready-made multi-asset products. Here are steps and tips for both approaches:
1. Decide Your Allocation:
Set a mix that fits your goals and risk profile. How much volatility can you stomach, and what returns do you need to aim for your goals? For instance, an investor may prefer 50% equities, 30% debt, and 20% gold. Aim for at least three asset classes for better balance. This mix will be the blueprint of your multi-asset portfolio. Remember that SEBI’s definition of a multi-asset fund requires at least three asset classes
2. DIY Route:
If you opt to construct the portfolio yourself, choose the appropriate investment instruments for each slice:
- Equity: Diversified mutual funds, ETFs, or direct stocks.
- Debt: Bond funds, government schemes (PPF, NSC), or FDs.
- Gold: Sovereign Gold Bonds, Gold ETFs, or Gold Mutual Funds.
For any other assets you include (say international equity for global diversification, or REITs for real estate), allocate through suitable mutual funds or ETFs available for those. The key is to cover all major bases in your chosen proportion.
Point to note: You will need to rebalance this portfolio periodically to bring the allocations back to target, because market movements will cause drift. Rebalancing enforces discipline.
3. Via Multi-Asset Funds:
Investing via Multi-Asset Funds: A multi-asset allocation fund is a type of hybrid mutual fund that invests in a mix of asset classes. These funds automatically invest across asset classes per their mandate and dynamically adjust the allocation in response to market conditions. You, as an investor, just buy units of the fund (via lump sum or SIP), and the fund’s managers handle the diversification internally.
4. Stay Disciplined:
Avoid switching based on short-term trends. The real benefit of a multi-asset portfolio lies in consistency. So, review your portfolio periodically, rebalance if needed, but don’t abandon the diversification ethos.
Disclaimer: This information is for general educational purposes only and not financial advice. Please consult your financial advisor before making any investment decisions, as investing involves risks.
To Wrap Up
As we step into the final quarter of 2025, the investing narrative in India is ever-changing.
From a financial planning perspective, incorporating multi-asset investments can uplift the robustness of your strategy. Ultimately, a portfolio should align with an investor’s goals and comfort with risk. A multi-asset approach can help maintain balance between growth and stability, making it easier to stay invested through different market cycles.
Note: Past performance is not indicative of future results. Before making any investment decisions, investors should conduct their own research and seek advice from qualified financial advisors to ensure that the respective funds, products and strategies are suitable for their specific financial situation and objectives.
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Disclaimers:
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