In August 2026, hybrid mutual funds in the mutual fund sector saw a positive inflow for the fifth consecutive month. The category’s net inflow for the month was Rs 10,045 crore, down 12.59% from Rs 11,491 crore in July 2026, according to the Association of Mutual Funds in India (AMFI).
Healthy multi-asset mutual fund inflows, which made up about 36.6% of all hybrid-category inflows in August 2026, have contributed to the fund category’s popularity.
In August 2026, multi-asset allocation funds recorded a net positive inflow of Rs 3,671 Cr, the second-highest inflow after the arbitrage fund in the hybrid category.
With this, multi-asset funds achieved a 60th consecutive month of positive flows and continued to be the fastest-growing class, with Assets Under Management (AUM) standing at Rs 2,07,221 crore, growing by 56.9% YoY and 487.2% over the three-year period, according to AMFI. It also accomplished its 59th straight month of positive flows with a net inflow of Rs 3,753 crore in July.
Over the last 3 years, AUM of multi-asset funds has increased from 35k cr to nearly 2.07 lakh crore, an increase of 1.72 lakh crore. Moreover, during the same period, the category had an inflow of Rs 1,617.33 crore with 12.19 lakh folios in August 2023 to an inflow of Rs 3,670.97 crore and folios of 60.18 lakh folios in August 2026.
As multi-asset funds are seeing an impressive rise, with AUM almost six-fold in three years and investor folios climbing nearly five-fold, this suggests that the growth is not restricted to a few large investors; rather, a much broader investor base is actively participating in the category.
The most important question, however, is whether or not a multi-asset fund makes more sense for a new or experienced investor. Additionally, should investors be worried that the category has grown to a much larger retail investment segment?
How have multi asset allocation funds grown in the last 5 years?
The below data shows a dramatic expansion in multi-asset allocation funds over the five years from August 2021 to August 2026. The category has grown not just in terms of assets, but also in the number of schemes, folios and sustained investor inflows.
| Period | Number of schemes | Total folios | Month-end AUM | Month-end inflows/outflows |
| August 2021 | 10 | 7,34,944 | Rs 17,059.05 Cr | Rs -49.04 Cr |
| August 2022 | 9 | 8,34,709 | Rs 21,081.59 Cr | Rs 126.72 Cr |
| August 2023 | 13 | 12,19,116 | Rs 35,288.31 Cr | Rs 1,617.33 Cr |
| August 2024 | 24 | 24,94,704 | Rs 92,675.58 Cr | Rs 2,826.89 Cr |
| August 2025 | 30 | 35,60,534 | Rs 1,32,103.62 Cr | Rs 3,527.91 Cr |
| August 2026 | 36 | 60,17,425 | Rs 2,07,221.17 Cr | Rs 3,670.97 Cr |
Source: AMFI
According to AMFI data, the category’s month-end AUM increased from Rs 17,059 crore in August 2021 to Rs 2.07 lakh crore in August 2026.
This means the category’s AUM has increased by around 1,115%, or more than 12 times, in five years. On a compounded annual basis, this translates to roughly 64% CAGR in AUM.
Investor participation has also expanded sharply. The number of folios rose from 7.35 lakh in August 2021 to 60.17 lakh in August 2026, an increase of around 718%, or more than eight times.
The August 2021 data shows a net outflow of Rs 49.04 crore, whereas the category recorded a net inflow of Rs 3,670.97 crore in August 2026. This represents a clear shift from net withdrawals to substantial investor demand.
What has triggered the popularity of multi asset funds?
A multi-asset allocation fund is a type of hybrid mutual fund that invests in at least three different asset classes: equity, debt and commodity, keeping a minimum investment of 10% in each class.
In recent months, there have been consistent positive inflows into multi-asset funds, primarily driven by recency bias among investors following the strong performance delivered by the category.
“A key factor behind this performance has been the category’s underlying exposure to gold and silver, with the category having an average allocation of nearly 25% to these assets, where Gold and silver were among the top performers in 2025 and in early 2026, which triggered strong investor interest in multi-asset strategies,” said Amitabh Lara, Executive Director, Anand Rathi Wealth.
However, it is also important to consider that momentum has moderated in recent months as gold prices have corrected after their strong rally earlier in 2026 and it has impacted the near-term performance of multi-asset funds.
“Consequently, monthly inflows into the category have moderated from around 7 to 10k crore during early 2026 to Rs 3,670 crore in recent months. This suggests that demand has been recent performance-led rather than purely driven by long-term asset-allocation considerations,” added Lara.
Multi-asset funds: What drove 487% AUM growth in the last 3 years?
Over the last 3 years, AUM of multi-asset funds has increased from 35k cr to nearly 2.07 lakh crore, an increase of 1.72 lakh crore. Moreover, during the same period, the category has witnessed cumulative net inflows of Rs 1.5 lakh crore.
“This indicates that nearly 87% of the increase in AUM can be broadly attributed to investor flows, while the modest portion has been attributed from market appreciation, primarily by commodities,” said Lara.
Therefore, strong growth in AUM has been flow-led rather than purely market-led.
“It is important to consider that, unlike equities, debt funds are primarily driven by institutional investors, including corporates, banks and treasuries, and therefore monthly outflows from debt funds do not necessarily indicate a broad-based shift in investor preference but are driven by treasuries money management,” commented Lara.
“However, recent strong inflows into small-cap funds are more driven by recency bias among investors, as the category has delivered strong returns over the recent months and investors often tend to increase allocations towards categories that have performed well recently,” he further added.
Therefore, the recent flows are driven by performance-led allocation rather than a shift towards hedging through multi-asset funds.
Are multi-asset funds a hedge against equity risk?
First, it is important to consider that after a prolonged period of underperformance, equity valuations have moderated across market segments, with -10 to 12% froth across market caps, which has made valuations relatively more attractive, according to Lara.
Historical market studies also suggest that periods of prolonged underperformance are often followed by stronger equity performance over the subsequent years.
Moreover, diversification remains important to manage concentration risk and reduce portfolio volatility. However, investors should note that multi-asset funds follow a relatively standardised asset-allocation approach, which may not be suitable for every investor.
A customised portfolio based on an investor’s risk profile, investment horizon and financial goals provides greater flexibility to align allocation between equity and debt and rebalance it periodically to align with their changes.
It is important to understand that the strong performance of multi asset allocation funds over the recent years has been largely driven by the exceptional rally in gold.
“As global uncertainties have started easing, gold performance has started moderating, which suggests multi asset funds are unlikely to deliver better than equity returns going forward. Moreover, going forward equities are likely to perform well with improving fundamentals and driven strong corporate earnings, macro economic outlook and easing uncertainities,” stated Lara.
Who should invest in multi-asset funds?
For investors who just started investing with small SIPs like Rs 500 or Rs 1000 can explore a category like multi-asset fund, as it offers exposure to equity, debt and commodities through a single product, without having to manage the asset allocation and periodic rebalancing themselves, while having broader diversification.
However, for investors who already have a well-diversified portfolio across mutual funds and other asset classes, adding a multi-asset fund will create duplication and overlap rather than genuine diversification, as investors may already have exposure to the same underlying equity and debt through their existing investments.
More importantly, investing through a multi-asset fund also reduces the investor’s flexibility and control over asset allocation, as the fund follows its own allocation framework.
“Therefore, multi-asset funds can be suitable for small first-time investors. For investors who already have a diversified portfolio, a customized asset-allocation strategy will continue to provide greater flexibility and control over staying aligned with their investment objectives,” recommended Lara.
Disclaimer: This article is for informational purposes only and should not be construed as investment, financial, tax, or legal advice. Any illustrations, examples, or return projections used in this article are for explanatory purposes only and do not guarantee actual investment outcomes. The views and opinions expressed by experts quoted in this article are their own and should not be considered investment recommendations. Readers should consult a qualified professional before making any financial decisions.
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