Pros and Cons of Investing in ICICI Prudential Multi-Asset Fund

In the current market scenario, you can't solely depend on equities for wealth creation.

It's better to follow a multi-asset approach where you invest in three assets - equity, debt, and gold.

In this regard, a multi-asset allocation fund is a meaningful choice to reap the benefits of diversification across these three assets.

Multi-asset funds are hybrid funds and mandated by the capital market regulator to invest at least 10% each in these three asset classes.

The fund manager has the flexibility to dynamically allocate funds depending on the outlook. So, at times, the allocation to certain asset classes may be high or low.

Some even have exposure to exposure to derivatives, REITs & InvITs, silver, and overseas equities.

The investment objective of these funds is to generate modest capital appreciation/income by investing in a diversified portfolio of equity & equity-related instruments, debt & money market instruments, and gold.

Thus, these funds attempt to reduce the overall risk to the portfolio by combining assets that are not highly correlated with each other.

In this editorial, we will take you through the pros and cons of investing in ICICI Prudential Multi-Asset Fund (previously called ICICI Prudential Dynamic Plan).

How Does This Fund Invest Your Money?

ICICI Prudential Multi-Asset Fund usually invests as follows:

• 65-80% of its assets are in equity & equity-related instruments,
• Up to 10% in preference shares, around 10-35% in debt & money market (including debt-oriented mutual fund schemes),
• Approximately 10-30% in Gold ETFs/units of Silver ETFs/exchange traded commodity derivatives (ETCDs), and
• Up to 10% in units of real estate investment trust (REITs) and infrastructure investment trusts (InvITs).

As per the May 2025 portfolio, the fund is holding 66.6% of its assets in equities (including overseas equities), around 14.2% in debt, and 19.2% in others (which include domestic mutual fund units, REITs & InvITs, rights, and cash & cash equivalents).

Within equities, the fund is currently holding a dominant portion in largecaps, followed by midcaps and smallcaps.

As per its May 2025 portfolio, the top stock holdings are ICICI Bank (4.1%), Reliance Industries (3.6%), and Maruti (3.3%). The equity portfolio is well-diversified with 96 stocks held across nine sectors.

The top 3 sectors are banking & financials (22.1%), auto & ancillaries (7.9%), and oil & gas (5.9%).

Should investors consider this fund?

Well, here are the pros and cons of the fund.

Read on...

Pros

#1 Solid Performance

ICICI Prudential Multi-Asset Fund holds a largecap biased equity portfolio. It follows a mix of bottom-up and top-down investing as well as a blend style of investing (i.e. a mix of growth and value).

This investing strategy has enabled the fund to deliver a superior performance.

The fund has delivered a compounded annualised rolling returns of 20% and 22.8% over 3 and 5 years, respectively. It has outperformed the Nifty 50 Total Return Index (TRI) as well as the category average.

During bull market phases, the fund has fared well. In the recent bull phases of the Indian equity market, from 23 March 2020, it has outdone the Nifty 50 TRI and its category peers. It has held its equity portfolio with conviction, as its portfolio turnover ratio has ranged between 25-30%.

The returns have come from not just equities but also other asset classes - commodities, REITs, InvITs, debt, and money market instruments, among others.

In case of debt and money market instruments, the fund has relied on AAA-rated, AA-rated, and sovereign debt. It has held short-to-medium term debt papers offering an optimal level of risk-reward, considering the interest rate scenario.

#2 Respectable Risk-Adjusted Returns

On a risk-adjusted returns - denoted by the sharpe ratio (0.62) and sortino ratio (1.54) - ICICI Prudential Multi-Asset Fund has fared better than the Nifty 50 TRI and is among the best in the multi-asset funds category.

The risk taken by the fund - denoted by the standard deviation (6.73) - has been more measured than many of its peers in the category and benchmark.

In other words, its investing strategy has worked in favour of the fund.

ICICI Prudential Multi-Asset Fund - Performance Snapshot

Scheme Name	Absolute (%)	CAGR (%)			Risk Ratios
	1 Yr	3 Yr	5 Yr	7 Yr	SD Annualised	Sharpe	Sortino
ICICI Pru Multi-Asset Fund	20.30	20.00	22.76	15.97	6.73	0.62	1.54
Category Average	13.60	14.62	18.86	13.99	7.75	0.55	0.93
Nifty 50 - TRI	16.31	13.85	18.69	14.22	12.22	0.28	0.64

Source: ACE MF

Cons

#1 Has Faltered During Bear Market Phases

In the past, the fund has faced challenges in bear market phases. At times, it has been among the bottom quartile performers in the category.

For instance, in the last market crash and bear market phase (between 14 January 2020 to 23 March 2020), it posted -30.5% returns, falling more than the category average (-25.7%). The Nifty 50 TRI had then posted -38.3% returns during that period.

While the fund fell less than the Nifty 50 TRI, the decline was considerable.

In the previous bear phase, between 3 March 2015 to 25 February 2016, the fund posted -19.4% returns, falling much more than some of its category peers.

The Nifty 50 TRI fell 21.7% during that period.

This shows how volatile the returns can the returns be in this scheme. This is because, compared to other schemes in the category, ICICI Prudential Multi-Asset Fund has a higher allocation to equities.

#2 May Witness Bouts of Underperformance

The fund is currently holding a largecap-oriented equity portfolio. This may help protect the downside risk to an extent. The flip side is that if the market rally favours momentum and/or growth stocks (usually midcaps and smallcaps), it may underperform the market.

The fortune of the fund is also linked to the underlying sectors. Currently, the fund has a higher allocation to banking & financials.

Nevertheless, the fund has the flexibility to adjust its sectors and stock exposure.

Conclusion

This dynamic approach allows ICICI Prudential Multi-Asset Fund to capitalise on investment opportunities across various asset classes depending on market conditions.

It has demonstrated an ability to achieve respectable risk-adjusted returns compared to its peers and the Nifty 50 TRI over the long term.

The fund is managed by veteran fund manager Sankaran Naren along with Manish Banthia, Ihab Dalwai, and Gaurav Chikane.

At a time when valuations in the midcap and smallcaps seem lofty, it's holding a largecap-oriented equity portfolio along with short-to-medium duration debt papers.

However, volatility cannot be ruled out.

It is important to keep an investment horizon of at least 3 to 5 years when investing in a multi-asset fund and have a moderately high risk appetite.

Exercise prudence when selecting mutual fund schemes for your portfolio. Invest sensibly and be a thoughtful investor.

Happy Investing.

#Table Note: Data as of 7 July 2025
Rolling period returns are calculated using the Direct Plan-Growth option. Returns over 1 year are compounded annualised.
Please note that returns here are historical returns.
Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.
Past performance is not an indicator of future returns.
The list of schemes is not exhaustive.
The securities quoted are for illustration only and are not recommendatory.
Speak to your investment advisor for further assistance before investing.
Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.

Disclaimer: This article is for information purposes only. It is not a recommendation and should not be treated as such.