Are multi-asset funds worth your money?

Multi-asset allocation funds , commonly known as MAAFs, promise the best of both worlds - stable returns and protection from market downturns. This is quite evident from the recent market correction, where these funds tumbled by just 4.2 per cent, compared to the Sensex's 11.4 per cent (from September 26, 2024 until April 1, 2025). However, does this mean investors should embrace MAAFs? Or are they just another product on the shelf? Understanding what MAAFs are Multi-asset allocation funds are hybrid funds that spread their investments across at least three asset classes, dedicating a minimum of 10 per cent to each, such as equities, debt and commodities like gold and silver. Some of these funds even have international exposure, either through direct investing or via FoF (fund of fund) structures, though this remains limited by regulatory caps. Going global These multi-asset funds have a foreign exposure of over 10 per cent Fund name Foreign exposure (%) ICICI Prudential Passive Multi-Asset FoF 29.9 DSP Multi Asset Allocation  17.1 Invesco India Multi Asset Allocation  14.1 Nippon India Multi Asset Allocation  11.6 Bandhan Multi Asset Allocation  10.3 Data as of February 28, 2024 The fact that they invest in at least three asset classes is what sets them apart from other hybrid funds, which only invest in equity and debt. This additional layer gives them a distinct defensive edge during market corrections, as seen from their recent performance. Suggested read: Multi-asset funds 101: What you need to know In recent years, multi-asset funds have gained plenty of traction. Of the 43 such funds (as per Value Research categorisation), 14 were launched just in the last two years, while another 14 have existed for over a decade. That said, these funds were officially embraced with defined regulations only during the re-categorisation exercise by SEBI, which came into effect in June 2018. Currently, the net assets of these funds stand at Rs 1.4 lakh crore, of which the ICICI Prudential Multi-Asset Fund , the largest fund in the category, holds nearly 37 per cent of the assets. While multi-asset funds are mandated to park at least 10 per cent of their money acro