The Power of SIPs in Multi-Asset Investing

The central lesson of long-term investing is that no single asset class delivers superior returns across all market cycles. Durable wealth creation rests not on maximising returns within a narrow asset class, but on disciplined allocation across multiple sources of return. Empirical evidence consistently shows that asset allocation, not stock selection, drives the bulk of long-term outcomes. While individual securities may deliver episodic outperformance, their contribution to sustained alpha over extended periods is modest. [EasyDNNnews:PaidContentStart]

Long-term portfolio performance is shaped by diversification across asset classes with distinct economic roles. Equities provide exposure to economic growth and compounding earnings, debt instruments offer accrual-based returns and income stability, and gold serves as a hedge against inflation and macroeconomic stress. Income-enhancing strategies such as covered calls can further improve returns during range-bound or consolidating markets. 

Effective multi-asset investing requires continuous assesSMEnt of both traditional and emerging asset classes, including commodities like gold and silver, as well as REITs and InvITs. Monitoring relative valuations, macro signals, correlations, and dynamically rebalancing exposures in response to changing conditions demands time, expertise, and access to data beyond the reach of most individual investors. This is where multi-asset funds come in. 

An appropriate approach to investing in multi-asset funds is through the SIP route, as it enables consistent investing without being influenced by short-term noise or shifting market narratives. Typically, investors are drawn to asset classes that have delivered strong historical returns, often entering near the peak of the cycle. In contrast, SIP-based investments in multi-asset funds capture returns across major asset classes within defined allocation bands, allowing investors to benefit from multiple cycles without taking excessive risk. Historically, this approach has delivered consistent high double-digit returns without requiring a high risk appetite. 

This can be gauged from the fact that a SIP of Rs 10,000 per month in a multi-asset fund has generated a return of approximately 14.3 per cent over the past decade. At this rate, a monthly investment of Rs 10,000 would have accumulated a corpus of roughly Rs 28–30 lakh in leading multi-asset funds. The ability to build a Rs 30 lakh corpus through disciplined monthly investing underscores the power of multi-asset allocation in capturing the best of various asset cycles, without being lured by whichever asset class happens to be in vogue or allocating disproportionately at the wrong point in the return cycle. 

Multi-asset funds address this gap by offering institutional-style asset allocation within a single investment vehicle. These funds typically anchor portfolios around the equities, while allocating the remainder across debt, commodities, derivatives, and the alternative yield-generating instruments. Regulatory norms mandate that multi-asset funds have to invest in at least three asset classes with an allocation of at least 10 per cent in each of those asset classes. 

Such funds also benefit from flexibility across market capitalisation, enabling managers to shift allocations between the large-to-mid and the Small-Cap stocks, based on their relative valuations and not limited by benchmark constraints. The approach allows managers to adjust holdings based on market conditions, rather than adhering to fixed styles. This flexibility allows managers to optimise risk-adjusted returns across market cycles while maintaining the fund’s overall multi-asset allocation objectives. 

Beyond asset allocation, multi-asset funds increasingly employ yield-enhancement strategies such as covered calls and investments in REITs. Covered call strategies generate option premiums on stocks already held in the portfolio, adding incremental income without significantly altering the risk profile. This combination of diversification and income generation positions multi-asset funds as a structurally resilient approach to long-term investing. 

Multi-asset funds also provide a convenient gateway to precious metals, particularly gold and silver, both of which have reached successive record highs. Gold has posted positive returns in eight of the past ten years, a record that has reaffirmed its role as a strategic portfolio stabiliser and renewed its appeal among longterm investors. 

By combining SIP discipline with multi-asset diversification, investors can systematically participate in equities, debt, commodities, and alternative strategies. This approach mitigates behavioural biases, smooths returns over cycles, and reduces the risk of mistimed allocation decisions. For retail investors requiring both consistency and flexibility, SIPs in multi-asset funds offer a practical and effective route to long-term wealth creation. 

The writer is Managing Director, Future First Financials Private Limited n Email ID : praveen@futurefirst.co.in n Website: www.futurefirst.co.in

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