SBI Multi Asset Allocation Fund: Benefit of multiple asset classes in one fund

Multi Asset Allocation funds are hybrid mutual fund schemes which invest in 3 or more asset classes. According to SEBI regulations multi asset allocation funds must invest minimum 10% each in at least 3 asset classes. Apart from the two most popular asset classes, debt and equity, these schemes invest in asset classes like gold, real estate investment trusts (REIT), infrastructure investment trusts (InvITs) etc.

Multi-asset allocation provides better diversification

The chart below shows the annual returns of different asset classes. You can see that different asset classes outperform / underperform each other in different market / economic conditions. You can see that debt is much more stable than equity. While equity and debt can have some positive correlation (usually with a lag) depending on fiscal and monetary policies, gold and equity are usually counter-cyclical to each other i.e. gold outperforms when equity underperforms and vice versa. As such, a combination of 3 or more asset classes can balance risk and return more effectively than a combination of just equity and debt.

Source: National Stock Exchange, Wold Gold Council, Advisorkhoj Research, as on 29^th October 2021. Nifty 50 TRI is used as a proxy for equity as an asset class, Nifty 10 year benchmark G-Sec Index is used as proxy for debt as an asset class and domestic price of Gold (in INR) is used as proxy for Gold as an asset class. Disclaimer: Past performance may or may not be sustained in the future.

About SBI Multi Asset allocation Fund

SBI Multi Asset Allocation Fund was launched in 2005 and has Rs 478 Crores of assets under management (AUM). Previously known as SBI Magnum Monthly Income Plan – Floater, this scheme in its multi asset allocation fund avatar came into being in May 2018 after AMCs rationalized and re-classified their older schemes to comply with SEBI’s mutual fund rationalization and re-classification directive.

The expense ratio of the scheme is 1.87% (Regular plan). Gaurav Mehta and Raj Gandhi are the fund managers of this scheme. The scheme has given 8.7% CAGR returns since inception. The chart below shows the growth of Rs 10,000 investment in the scheme over the last 5 years (ending 19th November 2021) versus Gold.

Source: Advisorkhoj Research

Limited Downside Risks

The multi asset allocation strategy of the scheme provides some downside protection and limits downside risks in highly volatile markets. The table below shows the 5 biggest drawdowns in the equity market over the last 10 years and its impact on SBI Multi Asset Allocation Fund. You can see that, in the major periods of high volatility in the equity markets, SBI Multi Asset Allocation Fund saw much smaller drawdowns compared to equity. This scheme can provide stability to your investment portfolio.

Source: Advisorkhoj Research

Current Asset Allocation

The waterfall chart below shows the current asset allocation of SBI Multi Asset Allocation Fund. The fund managers are very prudent about risks. The equity allocation of the scheme portfolio has a large cap bias, while the fixed income portion of the portfolio is primarily G-Secs and PSU bonds (high credit quality).

Source: Advisorkhoj Research, SBI MF monthly fund factsheet (as on 31^st October 2021).

Wealth creation track record

The chart below shows the growth of Rs 10,000 monthly SIP in SBI Multi Asset Allocation Fund over the last 10 years (ending 18^th November 2021). With a cumulative investment of Rs 12 lakhs you could have accumulated a corpus of Rs 21 lakhs at XIRR of 10.87%. The SIP performance of SBI Multi Asset Allocation Fund shows its potential as a wealth creator over long investment tenures.

Source: Advisorkhoj Research

Why invest in SBI Multi Asset Allocation Fund?

• Convenience: The fund invests in multiple asset classes depending on the opportunities that exist in each asset class. This saves you the hassle of investing in an equity, debt and gold fund on your own. Also, you incur the cost of investing in one fund vis-à-vis if you invested separately in each asset class-based fund.


• Diversification: As the fund invests in multiple asset classes, having low correlation with each other, the opportunity for stable long-term capital growth is better. The good performance of any one asset class in a year helps cushion against the poor performance of others thus stabilising the returns.


• Actively Managed Portfolio in one Fund: The fund is actively managed which means it makes the reallocation decision across asset classes for you according to the current market scenario. This eliminates the hassle of the investors timing the market and rebalancing the portfolio consisting of multiple asset classes.

Who should invest in SBI Multi Asset Allocation Fund?

• Investors looking for a long-term strategic allocation to different asset classes


• Investors looking for relatively stable returns with low downside risks


• Investors with moderately high risk appetites


• Investors with long investment tenures. We recommend minimum 3 years investment tenures for this scheme.

Investors should consult with their financial advisors if SBI Multi Asset Allocation Fund is suitable for their investment needs.