Want gold exposure without going all in? Multi-asset funds could be your answer

For Indian investors, portfolio stability has become a key priority, especially in the wake of heightened equity market volatility and global macro uncertainties. While equities have delivered solid returns over the long term — such as the NIFTY’s strong performance over the past decade — they remain highly sensitive to market cycles. In the current environment, sharp fluctuations have made many investors wary of concentrated equity exposure.

At the same time, traditional instruments like bank fixed deposits (FDs) offer limited upside. Though perceived as safe, FDs often fail to deliver inflation-beating returns after taxes, leading to wealth erosion in real terms over the long run.

This is where multi-asset funds are emerging as a smart alternative. These funds invest across equities, debt, and gold (or other commodities), offering built-in diversification. By balancing growth assets like equity with stability-focused instruments like bonds and gold, they aim to deliver more consistent, risk-adjusted returns across different market cycles.

We can describe a multi-asset fund as a type of mutual fund that invests across multiple asset classes—typically equity, debt, and gold (or other commodities)—within a single portfolio. These funds aim to balance risk and return by diversifying across assets that tend to perform differently in various market conditions.

In India, SEBI mandates that multi-asset allocation funds must invest at least 10% each in equity, debt, and gold or other commodities.

> How do multi-asset funds invest in Gold?

Multi-asset funds typically gain gold exposure by investing in:

Gold ETFs

Gold Fund of Funds

Sovereign Gold Bonds (SGBs) in some cases

This allows investors to indirectly participate in gold price movements without needing to buy or store physical gold.

“With gold prices climbing and uncertainty on the rise, investors naturally explore avenues to increase their exposure. Multi-asset funds are increasingly discussed in this context, but it is important to understand what they are and what they are not. These funds are built for broad diversification, typically investing across equities and fixed income and a small allocation to gold, usually in the 10% to 20 % range. Gold plays a supporting role here, helping manage volatility and improve risk-adjusted returns. But if your primary goal is to ride a gold rally or hedge against inflation, this structure may not go far enough,” said to Anand K Rathi, co-founder of MIRA Money.

“More direct instruments like Sovereign Gold Bonds, Gold ETFs, or digital gold offer better alignment for meaningful exposure to gold. These provide concentrated exposure and, in the case of SGBs, also come with tax advantages and government backing. In short, multi-asset funds are excellent for creating balanced, all-weather portfolios but are not designed for gold-focused strategies. If gold is your destination, take a direct route,” Rathi added.

Benefits of Multi-Asset Funds for gold exposure

1. Built-in Diversification

You get gold, equity, and fixed income in one fund—ideal if you don’t want to manage each component separately.

2. Professional Allocation

Fund managers actively adjust allocations based on market conditions, potentially increasing gold weight when equity markets are volatile.

3. Smoother Returns

Gold often performs well when equities don’t. Holding both in one fund reduces portfolio shocks during turbulent periods.

4. Tax Efficiency

If held for more than 3 years, multi-asset funds qualify for long-term capital gains tax with indexation—more tax-efficient than direct gold investment.

Limitations

Limited Gold Allocation: If your goal is to invest heavily in gold (e.g. 25%+ of your portfolio), a multi-asset fund may not be enough. Most only allocate 10–20% to gold.

Indirect Exposure: You won’t own gold directly; performance depends on gold ETF or FOF returns.

Not Gold-Focused: Gold is just one part of the portfolio—this isn’t ideal if you’re primarily bullish on gold.

Who should consider a multi-asset fund?

A multi-asset fund is a great choice for:

First-time investors seeking some exposure to gold without managing multiple investments

Those who prefer automated rebalancing

Investors with a moderate risk appetite looking for a balanced portfolio

If you’re specifically looking to maximize gains from gold, direct options like Gold ETFs, SGBs, or gold mutual funds may be more appropriate.