One fund for all seasons

Summary: The average MAAF allocation describes the category but fits no fund within it—like a cockpit designed for the average pilot that fits nobody at all. Our cover story does what the label should have done: sorts the category by what funds actually do.

Summary: The average MAAF allocation describes the category but fits no fund within it—like a cockpit designed for the average pilot that fits nobody at all. Our cover story does what the label should have done: sorts the category by what funds actually do. Something has been happening in Indian markets over the past few months that tells you everything about how investors actually behave versus how they imagine they behave. Through the first quarter of 2026, markets lurched with remarkable unpredictability. Geopolitical tensions sent oil prices into their own orbit and equities out of theirs. Amidst this turmoil, India’s domestic investors found a new favourite: multi-asset allocation funds, or MAAFs. A category that promises a bite of every important dish you need for a balanced portfolio, with at least 10 per cent exposure each to equity, debt, and commodities. The category received its highest-ever monthly inflow in January 2026 at Rs 10,485 crore. Over the 12 months through February 2026, it accumulated Rs 61,666 crore, a massive jump of Rs 25,869 crore over the previous year. But this sudden rush into MAAFs tells you less about the category and more about investors. MAAFs are designed to be an all-weather solution. The irony is that they find their spotlight only when the weather turns rough. An all-weather solution, noticed only in bad weather Investors have not suddenly woken up to the importance of asset allocation. What has happened is simpler: equities have turned weak, gold has surged, and because gold is a core component of MAAFs, the category is riding that wave. Gold ETFs pulled in over Rs 21,000 crore in January 2026 alone. MAAFs recorded their highest-ever inflow the same month. That is not a coincidence. That is recency bias playing out in plain sight. The deeper problem with this behaviour is timing. Investors do not run for cover before the storm reaches the shore. They run after it has already arrived, after the damage to their portfolio is done. And that is how their portfolio allocation math turns out wrong. Investors get asset allocation wrong, consistently There are two mistakes investors make with remarkable regularity. The first is chasing whatever has just worked and dismissing whatever has not. The table ‘No asset stays on top’ illustrates this well. In the sharpest bull runs—March 2009 to March 2015 and March 2020 to October 2021—equity delivered 25.3 and 82.6 per cent per annum respectively. Gold returned 1.3 and 9.6 per cent per annum. The gap was so wide that holding anything other than equity would have felt like a poor decision. Every single pessimistic period tells the opposite story. Between March 2015 and February 2016, equity was down 21 per cent with gold up almost 10 per cent. When equity stumbled during the pandemic crash, gold and debt were the only anchors. In bull markets, equity looks so compelling that debt and gold seem ignorable. In crashes, equity looks so risky that gold and debt feel indispensable. Investors swing between these views, forgetting the last each time. Because asset allocation isn’t treated as a permanent discipline, something to maintain from the start, every market shift catches portfolios unprepared. The allocation decision, in practice, is almost never forward-looking. With extraordinary consistency, it is a rear-view mirror reading of whatever just happened. The rush into whatever has worked recently leads to the second mistake: arriving too late. Between June 2022 and September 2024, the Nifty 500 TRI delivered over 80 per cent in cumulative returns. Monthly net flows into equity funds marched upward in lockstep, from around Rs 15,000 crore to over Rs 36,000 crore a month. The money did not lead the rally. It followed it with each rupee arriving later and at a higher price than the one before. See chart: Returns lead. Investors follow. The bigger problem is that this enthusiasm does not last. As a correction followed, most investors did not wait it out. They left to chase whichever asset had just turned comforting. That was gold, which had returned over 150 per cent between January 2024 and February 2026. The inflows followed that curve too. See chart: Late to gold, as always. This constant movement in and out, driven entirely by what markets have just done, is what damages returns and leaves portfolios permanently unsteady. Getting the timing right on your own is hard. Getting the allocation right on your own, and then holding it through volatility, is harder still. This is where MAAFs make sense A MAAF takes the DIY problem off the table. It m

This article was originally published on April 20, 2026.