NFO Pick – (PGIM India Multi Asset Allocation Fund)

24 Nov 2025 , 01:06 AM

WHY A MULTI ASSET ALLOCATION FUND (MAAF) APPROACH

A multi asset allocation fund spreads its portfolio across multiple asset classes like equity, debt, money market instruments, gold, silver, REITs etc. There are some eminent advantages in such a combination.

• In the last 20 years, Indian markets have seen outperformance from various classes like equities, debt, gold, and silver. MAAF is better than trying to time each asset class.
• Equities have low correlation with debt and negative correlation with gold and silver. This ensures genuine diversification of risk, and boosts risk-adjusted returns.
• Adding gold and silver to the portfolio, also gives the portfolio protection and participation in gains during economically challenging times, offsetting equity losses.
• Since equities are still the predominant asset, wealth creation remains the core theme, but it is now laced with a focus on risk-adjusted returns, rather than pure returns.
• When a multi-asset approach is adopted, it allows participation in upsides of various assets and reduces the drawdown in the portfolio during a downturn in any asset class.
• That is evident from the fact that a simulated MAAF portfolio has a Sharpe ratio that is meaningfully higher than the Sharpe ratio of Nifty 500 TRI.

Let us look at 3 compelling cases to invest in the PGIM India Multi Asset Allocation Fund.

WHY INVEST IN PGIM INDIA MULTI ASSET ALLOCATION FUND

There are several compelling reasons to invest in a multi-asset allocation fund to maintain a better balance of risk and returns. Above all, the MAAF structure is also a lot more tax efficient to the investor as we shall see later. MAAF is about true-blue diversification; not like the limited diversification we get in equity portfolios.

• The first compelling reason to invest in equities is portfolio performance of MAAF. Let us look at 5-year rolling returns. MAAF would have delivered portfolio returns of 10.8% CAGR in the last 5 years, with only pure equities doing better. The drawdowns in MAAF were much lower than equity and precious metals, with worst case returns still positive. In fact, the probability of MAAF delivering above 10% returns is nearly 50%.
• A very important aspect of MAAF is that if you churn multiple asset classes like equity, debt, gold and silver on your own, tax implications are steep. MF being a pass-through vehicle, is not subjected to tax and that makes such churn tax-neutral to investors. Also, the individual biases are eliminated with a more structured approach to allocation across asset classes, based on verifiable parameters.

This tax-neutral churn across assets is a big advantage of MAAF, and a compelling reason for investor to opt for the fund.

HOW MULTI ASSET ALLOCATION FUNDS PERFORMED?

Here is how multi-asset allocation funds performed in India across various time frames. We have restricted to 8 funds with a five-year track record.

Multi Asset Allocation Funds Scheme Name	Return (%) 1-Year	Return (%) 3-Years	Return (%) 5-Years	Daily AUM (₹ in Crore)
Quant Multi Asset Allocation Fund	13.85	20.46	25.81	4,139.24
ICICI Prudential Multi-Asset Fund	16.55	19.53	23.79	74,119.63
Nippon India MAAF	18.13	19.94	17.45	9,259.81
Tata Multi Asset Allocation Fund	13.35	15.16	16.30	4,571.19
UTI Multi Asset Allocation Fund	12.13	20.04	15.72	6,515.49
SBI Multi Asset Allocation Fund	15.99	17.75	15.12	11,791.01
HDFC Multi-Asset Fund	12.91	14.61	14.86	5,254.39
Axis Multi Asset Allocation Fund	14.48	13.37	12.57	1,772.94
Data Source: AMFI

In India, there are 31 multi-asset allocation funds (MAAF), but we have only considered 8 funds in this ranking with a 5-year track record. The total AUM of the 31 funds stands at ₹1,65,890 Crore, of which the top 8 funds manage an AUM of ₹1,17,424 Crore, accounting for 70.8% of overall AUM.

In last 1-year, average returns of the top-8 funds averaged 14.67%, with very low volatility. Over a 3-year period, the average returns stood at 17.61%, again with limited volatility. However, over a 5-year period, the average returns stood at 17.70%, with sharply high levels of volatility. This is more because strategies of Multi-Asset Allocation funds vary sharply.

GLANCE AT PGIM INDIA MULTI ASSET ALLOCATION FUND

Here are key details of the PGIM India Multi Asset Allocation Fund.

• NFO opened on November 11, 2025 and closes on November 25, 2025. It is an open-ended active hybrid fund allocating the corpus across equities, debt, money market instruments, gold, and silver. This enables the fund to derisk across multiple cycles.
• On the risk-o-meter, PGIM India Multi Asset Allocation Fund is classified as “Very High Risk,” due to its exposure across high-risk and volatile asset classes like equities, gold, and silver. There is also the risk of asset allocation, which is largely discretionary.
• PGIM India Multi Asset Allocation Fund is best suited to investors looking at capital appreciation in the long run, with a more calibrated and diversified approach. The intent is to focus on investors looking to optimise risk-adjusted returns.
• There will be an exit load of 0.50% of the value of units if redeemed within 90 days of the allotment date. For any redemption after 90 days, no exit load is applicable. However, it is advisable to take a time perspective of 5-7 years for best results.
• Minimum application amount in NFO is ₹5,000 and in multiples of ₹1 thereafter. Additional purchases can be done with minimum ₹1,000. Investors can look to create SIP structures to get the best benefits of rupee cost averaging.
• It will offer Regular Plans and Direct plans to investors. The fund will also offer the growth and the IDCW option to investors. Designated fund managers are Vivek Sharma, Ananda Padmanabhan Anjeneya, Utsav Mehta, and Puneet Pal.
• The fund will invest its corpus predominantly across equity (30-70%), debt (10-35%), Precious Metals (10-25%), and REITs (0-10%). The taxation of the fund will depend on whether equities, as per definition, are above 65% or not.

Let us finally look at the taxation aspect.

TAX TREATMENT OF RETURNS ON THE FUND

If PGIM India Multi Asset Allocation Fund gets classified as equity fund for income tax purposes; Dividends will be taxed at the incremental rate applicable. Short term capital gains – STCG (up to 12 months) will be taxed at 20.8% (including 4% cess). Long term capital Gains – LTCG (beyond 12 months), will be taxed at 12.5% after factoring in a base annual exemption limit of ₹1,25,000. There will be no indexation benefits available!

If PGIM India Multi Asset Allocation Fund gets classified as non-equity fund for income tax purposes; Dividends will be still taxed at the incremental rate. Short term capital gains – STCG (up to 24 months) will be taxed at incremental rate. Long term Capital Gains – LTCG (beyond 24 months), will be taxed at 12.5%. There will be no indexation benefits available!

Whether it gets classified as equity or non-equity fund, the biggest benefit for investors will be that the allocation and churn across asset classes will happen in a tax neutral manner and without the investor having to make a DIY decision.