Multi-asset allocation fund

Most hybrid fund categories are defined by how much goes into just two asset classes — equity and debt. A Multi-Asset Allocation Fund is built on a third: it is defined by holding at least three asset classes at once, each with a guaranteed minimum slice.

The workbook's own words, stated as plainly as any hybrid category in the chapter: "Multi-Asset Allocation Funds invest in at least 3 asset classes with a minimum 10% allocation to each asset class." Diversification here is not left to the fund manager's discretion — it is a floor built into what the category is allowed to call itself.

Two numbers define the category:

• At least 3 asset classes must be held — equity, debt and a third (commonly gold, or another asset class such as real estate-linked instruments or commodities, though the workbook does not restrict the third class to any one option).
• A minimum of 10% must be allocated to each of those asset classes — so no single asset class the fund claims to hold can be a token position.

This places it alongside, but distinct from, the workbook's other hybrid categories in the same chapter:

Every other hybrid category in that list is built around a two-asset-class equity/debt split, with the split itself as the defining feature. The multi-asset category is the only one defined by the number of asset classes and a per-class floor, rather than by a target equity or debt band.

Horizon Multi-Asset Allocation Fund holds three asset classes to satisfy the category definition:

This qualifies as a multi-asset allocation fund. Now compare a fund that instead holds:

Even though this second fund technically touches three asset classes, its gold position is too small to count as a genuine third allocation under the category's own rule — it would not qualify as a multi-asset allocation fund on this allocation, and would need to raise the gold weight to at least 10% (rebalancing equity or debt down) to meet the definition. The 10% figure is not a suggestion; it is the line between "diversified across three asset classes" and "mostly two asset classes with a token third position".

Chapter 2 (Financial Markets & Investment Products), in the Hybrid Funds passage, defines Multi-Asset Allocation Funds in the same list as conservative, aggressive and balanced hybrids, and Dynamic Asset Allocation Funds. Expect a direct recall question on the "at least 3 asset classes, minimum 10% each" rule, and a scenario question testing whether a given allocation (like the 7% gold example above) actually satisfies the category definition.

• Both parts of the rule must hold together: at least three asset classes, AND at least 10% in each. A fund with three asset classes but one of them under 10% does not meet the definition.
• This is a different hybrid category from Dynamic Asset Allocation Funds, which move between just equity and debt dynamically — multi-asset is about the number of asset classes, dynamic asset allocation is about dynamically shifting between two.
• The 10% figure is a floor, not a cap — a multi-asset fund can hold well above 10% in any one class, as long as none of its declared asset classes falls below that floor.
• The workbook does not restrict what the third (or further) asset class must be — only that at least three classes are held with the stated minimum each.
• Do not confuse this with conservative/aggressive/balanced hybrid funds, all of which are defined purely by an equity/debt split with no third asset class requirement at all.