Multi-Asset Allocation Funds: Features and SEBI Rule
Why in the news
MAAFs have matched medium-term returns of traditional equity categories while carrying less risk.
About MAAFs
- Hybrid schemes spread across equity, debt/money market and commodities (mainly gold or silver).
- SEBI rule: at least 10% in each of three or more classes, always.
Key features
- Diversification reduces concentration risk; smaller drawdowns in equity falls.
- Dynamic rebalancing by managers.
- Inflation hedge via gold and commodities.
- Tax: equity above 35% means hybrid-debt treatment; SEBI rules now classify funds more clearly.
Why they are doing well
Equity gains, stable debt and gold support gave steady, risk-adjusted returns over three years.
| Feature | MAAFs | Equity funds |
|---|---|---|
| Volatility | Moderate | High |
| 3-5 year return (approx.) | 9-12% | 11-14% |
| Downside protection | High | Low |
Exam angle
- Regulator: SEBI; category: hybrid fund.
- Numbers: 10% per class; 35% equity tax threshold.