Multi-asset funds take divergent paths on gold, silver allocation

Half of the top 10 schemes pare exposure, others raise their bets

As gold and silver prices scaled new peaks, multi-asset fund managers took divergent routes on their commodity exposure. While half the top 10 schemes pared their allocations to gold and silver over the past year, others increased their bets to capture the rally’s momentum. 

At the end of September, the largest scheme — ICICI Prudential Multi Asset Allocation Fund (MAAF) — had 10.5 per cent of its corpus invested in commodities, down from the recent peak of 12.6 per cent in November 2024, shows data from Value Research. Schemes offered by SBI, Nippon India, UTI, and WhiteOak Capital have also seen a decline. However, MAAFs of Kotak Mahindra, Aditya Birla Sun Life, DSP, and Tata have seen a rise in gold and silver exposure. 

The varied trend in asset allocation of MAAFs, according to experts, is largely due to variations in investment models and tax positioning. Only a few schemes allow active tactical calls by the fund manager. 

“The changes in exposure to gold could be driven by multiple factors, ranging from a floor and a cap as per the investment objective to fund managers’ view of the asset class in terms of demand-supply and price movements of the asset versus estimated fair value. The mark-to-market impact of the existing holdings of the asset class is also a factor. The relative undervaluation or overvaluation of other asset classes like equity and debt in the portfolio could also influence the gold holding,” said Vishal Dhawan, founder and chief executive officer (CEO), Plan Ahead Wealth Advisors. 

The allocations are determined by models that use varying data and indicators like equity valuations, yields offered by various fixed-income instruments, and relative valuation of commodities. Interest rate outlook and economic growth indicators are also among the factors. 

A few schemes, like Samco multi-asset fund, also take the relative price momentum into account. “Samco MAAF increased its allocation to gold during the past year as a result of our model-driven investing approach, which identified significant momentum in gold as an asset class, particularly at a time when equities were underperforming,” said Umeshkumar Mehta, chief investment officer (CIO), SAMCO Mutual Fund. 

MAAFs have been the top performing major fund category in the near term due to their diversified asset class exposure. These schemes have to compulsorily invest at least 10 per cent of the corpus in equity, debt and commodities. However, most schemes maintain a gross equity exposure of 65 per cent to qualify for equity taxation. These schemes generally use equity arbitrage to lower net equity allocation when equities are not expected to do well. 

The comparatively better performance due to lower equity exposure and the precious metal rally led to a sharp rise in investor interest in the category in recent months. The category has added over 880,000 net accounts in 2025 so far. The folio additions is 47 per cent of the net new account openings in the hybrid category. The assets under management is up 36 per cent at 

₹1.4 trillion in the same period.