Multi-Asset Funds: Is Your 'Safe' Pick High Risk?

Multi-asset allocation funds sound safe, but their risk levels vary wildly. Out of 34 such schemes in India, only one is rated Low risk. Five carry a High risk rating. The difference comes down to how much equity each fund holds inside.

Here's what happened: Of 34 multi-asset allocation funds available in India, only one scheme currently carries a Low risk rating under SEBI's riskometer system.. Five schemes in the same category are rated High risk, largely because they maintain very large equity allocations — sometimes above 65% of the portfolio.. SEBI mandates that multi-asset funds invest in at least 3 asset classes, but gives fund managers wide latitude on the exact proportion, creating big risk differences within the same category..

What you should do: Check your fund's current riskometer rating on the AMC's website or AMFI's portal — ratings are updated monthly and may have changed since you invested.. Compare the equity allocation percentage across multi-asset funds before choosing one — a scheme holding 70% equities is not a conservative pick regardless of its label.. If you invested in a multi-asset fund expecting low volatility, request a portfolio factsheet from your broker or app and confirm the asset split matches your actual risk appetite..

Pro tip: A multi-asset fund taxed as an equity fund (65%+ in equities) qualifies for Long-Term Capital Gains at 12.5% after 1 year — but it also swings like one in a bear market. Know which type you hold.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.