Heightened uncertainties and increasing volatility underscore the importance of disciplined asset allocation for investors – and multi asset funds come in very handy to achieve this.
India’s strong macros are being tested now with a sharp 50-60% spike in oil prices. If oil settles in the $70-90 range, expect some pressure on CAD and some knock down on growth – perhaps from 7% to 6.5% - which is manageable. Real worries kick in if oil stays above $100 – which hasn’t happened on a sustained basis for more than 6 months at a stretch over the last 30 years.
Oil settling in the $70-90 range can dampen upside momentum of equity markets which are perhaps ready for a 5-10% bounce up. Interest rates will likely remain in the same range – hikes come into play only if there is a marked deterioration from the base case of oil in the $70-90 range.
Precious metals are going sideways after a huge 2025. Gold continues to look good from a medium term perspective while silver has now seen the entry of large leveraged positions – which can muddy the waters a bit.
Outlook for all 3 asset classes for 2026 is therefore not very rosy. Don’t expect 2025 type of returns (20%+) from MAAFs this year. Expect MAAFs to do their job of maintaining well balanced and well diversified portfolios, with the potential to participate meaningfully in whichever asset class surprises to the upside this year.
MAAFs therefore are perhaps the best way to invest intoday’s highly dynamic world.
Axis MF’s MAAF has a model that guides on allocation across equity, debt and precious metals. Its investment committee reviews this on a monthly basis (or more frequently if required) and arrives at allocation across the 3 asset classes as also the split within each (large/mid/small for equity, gold/silver for precious metals and accrual/duration for debt).
The fund has around 55% allocation to net equity, 10% to arbitrage, 18% to precious metals and the balance 17% in debt (largely accrual).
On a 1 yr basis, the fund’s 18% return is about 100 bps higher than the category average, placing it in the 2nd quartile of its peer set.