Gold, Equity, Debt: How Multi Asset Funds Help You Diversify And Stay Protected

Last Updated:July 30, 2025, 15:02 IST

Hybrid mutual funds are gaining popularity amid market volatility, balancing risk and return.

Hybrid Funds: As equity markets remain volatile and fixed-income returns struggle to beat inflation, hybrid mutual funds are emerging as a preferred option for investors seeking a balance of risk and return. Experts say hybrid funds offer stability through debt and commodities while allowing growth via equity exposure.

Understanding The Hybrid Landscape

According to SEBI’s classification, hybrid mutual funds are divided into seven categories: Conservative Hybrid, Aggressive Hybrid, Balanced Hybrid, Balanced Advantage, Multi Asset Allocation, Arbitrage, and Equity Savings Funds.

“Investors usually opt for conservative or aggressive hybrid funds based on their risk appetite and time horizon,” says Sameer Mathur, MD and Founder of Roinet Solutions. He adds, “But Multi Asset Allocation Funds are now catching investor attention, especially with rising gold prices acting as a hedge during market corrections.”

Multi Asset Allocation Funds require a minimum of 10% allocation in each of three asset classes—equity, debt, and commodities (typically gold or silver). This spread helps reduce volatility while still targeting decent returns. “Gold’s recent performance makes this category particularly attractive for those seeking diversification and inflation protection,” Mathur explains.

Tax Matters And Market Flexibility

Taxation varies across hybrid funds. If equity exposure exceeds 65%, the fund is taxed like an equity fund. Otherwise, it’s taxed like a debt fund. This makes it essential for investors to check the fund structure before investing.

Sanket Prabhu, Director and Head of Wealth, notes, “Balanced Advantage Funds are the most flexible of all. Fund managers can adjust equity exposure dynamically—buy more when markets are cheap and reduce when they’re overvalued.”

He adds, “Regardless of category, always assess a fund’s track record through different market cycles. Pick what suits your goals and risk tolerance.”

Varun Yadav

Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More

Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More

view comments

First Published:

Read More