India multi-asset mutual fund inflows surge 22% in June
Indian investors pushed inflows into multi-asset allocation funds up 22% in June, seeking shelter from equity volatility through diversified portfolios that offer distinct tax advantages.
Net inflows into India's multi-asset allocation mutual funds reached ₹4,810.76 crore in June, a 22.46% increase from ₹3,928.51 crore in May, according to the Association of Mutual Funds in India. The category emerged as a primary driver of hybrid fund growth as investors adjusted to turbulent market conditions.
Geopolitical tensions, sustained foreign capital outflows, and rising fears of inflation and interest rate hikes have triggered sharp price swings across equities, gold, and commodities. This environment has eroded the appeal of single-asset strategies, pushing capital toward products that can dynamically shift weightings.
SEBI regulations require multi-asset funds to allocate at least 10% of their portfolios to a minimum of three distinct asset classes. Among the largest by assets under management is the Nippon India Multi Asset Allocation Fund, which exemplifies the category's approach of blending growth equities with stabilized debt and gold.
The structural mandate forces diversification, shielding investors from concentrated drawdowns. “Multi asset allocation funds reduce risk from equity asset class and also utilise opportunities arising from other asset classes like precious metals for alpha creation and use fixed income assets to ensure overall moderate returns even when equity markets go through a tough time,” said G Chokkalingam, founder and head of research at Equinomics Research.
Despite recent market turbulence, leading schemes have posted robust three-year annualized returns. The Nippon India Multi Asset Allocation Fund Direct Growth leads the category with roughly 20%, followed by SBI and Aditya Birla Sun Life funds at approximately 17% each, and Motilal Oswal at 14%. DD Sharma, managing director of MF King, noted these funds have remained in positive territory over the past six months.
Beyond raw returns, the strategy offers specific fiscal benefits. “Multi-asset funds are highly relevant in the present times, characterised by huge volatility in equity. Particularly now, gold has corrected significantly from the peak, and, therefore, the downward risk is low. Even though debt offers only moderate returns, investment in secured debt instruments can offer decent inflation-beating returns with very low risk,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. Furthermore, funds maintaining at least 65% equity exposure qualify for favorable equity taxation, exempting long-term capital gains up to ₹1.25 lakhs and taxing excess gains at 12.5%.
