Kotak Multi Asset Allocation Fund: Diversification for stability in volatile markets

Current Market Scenario

Headwinds stirred up by the ongoing conflict in the Persian Gulf and the prolonged disruption to energy supplies have caused uncertainty in the equity markets, in spite of the market remaining broadly rangebound. With the Strait of Hormuz remaining virtually shut, crude oil prices remain high, with Brent crude at around $110 per barrel (as on 15^th May 2026, Source: Bloomberg). The Indian Rupee has depreciated to around Rs 95.7 to the dollar (as on 15^th May 2026, Source: Bloomberg). FII flows were negative in March and April, and FII outflows have continued into May so far. Precious metal prices declined in March when US Treasury Bond yields rose (see the graphic below). Following the US-Iran ceasefire in early April, the dollar weakened, and precious metal prices resumed their uptrend. A weakening INR has also helped gold and silver prices in India to go up. That said, precious metals could face near-term headwinds if US Treasury Bond yields rise further.

Source: MCX spot prices, Bloomberg, Advisorkhoj Research, as on 15^th May 2026

In the current environment of uncertainty, a multi-asset allocation strategy that provides exposure to three or more asset classes can provide stability to your portfolio and may be suitable for long-term investors. In this article, we will review the Kotak Multi Asset Allocation, a top-performing fund in the multi-asset allocation funds category.

What is multi-asset allocation?

Traditional asset allocation refers to diversifying your portfolio with allocations to equity and debt based on your risk appetite. However, including other asset classes, e.g., commodities (gold, silver), international equities, etc., can provide richer diversification to your investment portfolio. Multi-asset allocation funds offer exposure to three or more asset classes wrapped up in a single product. As per SEBI's mandate, multi-asset allocation funds must have a minimum 10% exposure in each asset class, with at least 3 asset classes in the scheme's underlying portfolio.

Benefits of a multi-asset allocation strategy

Winners rotate across asset classes (see the chart below). It is difficult to predict the best-performing asset class at any point in time. Exposure to multiple asset classes may bring more consistency to your portfolio performance across market conditions or investment cycles.

Source: MCX spot prices, NSE, Advisorkhoj Research, as on 31^st December 2025. Equity is represented by Nifty 50 TRI, debt by Nifty 10 year Benchmark G-Sec Index, Gold and Silver by MCX spot prices of respective commodities

• Improve portfolio risk return trade-off: The charts below show the median and standard deviation of 1-year rolling returns for different tenures over the last 20 years. You can see that different asset classes have different risk / return profiles. A mix of asset classes (3 or more) can balance risk and returns, more optimally.
  
  

  

  Source: MCX spot prices, NSE, Advisorkhoj Research, as on 15^th May 2026. Equity is represented by Nifty 50 TRI, Debt by Nifty 10-year Benchmark G-Sec Index, Gold and Silver by MCX spot prices.



• Silver has growing industrial applications: Silver's industrial use, especially in new age technologies like artificial intelligence infrastructure, quantum computing, and advanced battery systems, may support demand over time. The recent government restrictions on silver imports could potentially impact silver supply dynamics in the domestic market.


• Equity and Gold are counter-cyclical: The chart below shows the 1-year rolling returns of Nifty 50 TRI (representing equity) and gold over the last 20 years. You can see that gold outperformed during periods when equity returns were low/negative. Multi-asset allocation funds can help protect against downside risk through their gold allocation.
  
  

  

  Source: Advisorkhoj Research as on 15^th May 2026

About Kotak Multi Asset Allocation Fund

The Kotak Multi Asset Allocation Fund is an open-ended scheme investing in Equity, Debt & Money Market Instruments, Commodity ETFs, and Exchange Traded Commodity Derivatives. The investment objective of the scheme is to generate long-term capital appreciation by investing in Equity & Equity-related Securities, Debt & Money Market Instruments, Commodity ETFs, and Exchange Traded Commodity Derivatives.

Rolling Returns vs Category: Outperformed peer average across market conditions

The chart below shows the 1-year rolling returns of Kotak Multi Asset Allocation funds versus the category average returns since the inception of the scheme. You can see that the fund consistently outperformed the peer average, except for a brief period.

Source: Advisorkhoj Research as on 22^nd May 2026

Outperformed the Category

The Kotak Multi Asset Allocation Fund has consistently outperformed the average performance of all the funds in the Multi Asset Allocation category across various timeframes since its launch. (See the chart below)

Source: Advisorkhoj Research as on 22^nd May 2026. *Multi Asset Allocation Fund

Consistently in upper quartiles

The Kotak Multi Asset Allocation Fund has consistently delivered superior performance relative to its peers. The chart below shows the quartile ranking of the scheme for different periods. You can see that the scheme has consistently been in the upper quartiles over sufficiently long investment periods.

Source: Advisorkhoj Research as on 22^nd May 2026

Current portfolio positioning

• Equity (65 - 80% including arbitrage): The investment focus is on stocks with a high earnings visibility going ahead. There are select pockets across industries where the earnings growth is pretty robust, and the market is rewarding those.


• Fixed Income (10 - 25%): The fund maintains the duration in the range of 5-7 years.


• Commodities ETFs / ETCDs (10 - 25%): Commodity allocations are actively adjusted in line with evolving market opportunities and macroeconomic developments. The fund has allocated to gold & silver accordingly.


• Arbitrage: In months when the arbitrage opportunities provide better returns than the debt papers, the fund deploys more assets into arbitrage trades. The benefit is that in months when the arbitrage returns are sub optimal, the fund has lower allocations to arbitrage and still maintains the 'equity' taxation status.
  
  

  

  Source: Fund Factsheet as on 30^th April 2026

Why invest in Kotak Multi Asset Allocation Fund?

• Multi asset diversification with exposure to equities, debt and commodities helping balance growth potential and stability


• Lower volatility compared to pure equity funds as different asset classes react differently during market ups and downs


• Actively managed by specialists across equity, debt and commodities ensuring research driven asset and security selection


• Suitable for long term investors seeking wealth creation with relatively smoother return patterns


• One stop investment option for investors who want diversified asset allocation without managing multiple schemes

Who should invest in the Kotak Multi Asset Allocation Fund?

The fund may be suitable for:

• Investors looking for capital appreciation over long investment horizons


• Investors who want to reduce portfolio volatility by diversifying across multiple asset classes


• Investors with a minimum 3 - 5 years investment tenure


• Investors with moderately high to high-risk appetites


• You can invest either in a lump sum or SIP based on your investment needs

Investors should consult their financial advisors or mutual fund distributors if Kotak Multi Asset Allocation Fund is suitable for their investment needs.