Is the traditional equity heavy portfolio allocation being challenged?
Most fund managers a few years ago would advise allocating 10% of portfolio to Gold . Now most are advising more. One global fund manger says he has 40% allocated to gold. That same fund manager says to stop looking at last 20 years SIP returns in India as the nominal GDP has collapsed from 12 to 8%. That scares someone like me who is equity heavy.
In today’s geopolitical climate, should I rethink my allocation and lean heavily towards metals, overseas markets and crypto? Or do you think this is just a phase?
This question comes up whenever equity markets become uncertain. It has happened many times in the past.
It is a very valid concern.
Every few years, one asset class looks far better than everything else. In the past, it was real estate, then gold, then bonds, then US stocks, and now metals like silver.
When these phases come, it feels like equity investing is no longer enough. But this feeling usually comes from short-term fear, not from long-term reality.
Equity returns may not be as high as the past 20 years, and that is okay. India is a more mature economy now, so expecting the same kind of explosive growth is unrealistic. Still, equity means owning businesses, and as long as companies grow profits over time, equity will continue to create wealth.
The faster the earnings grow, the shares will follow the path. The only control we have is to buy the same stocks at a fair price, maybe a bit undervalued, to uplift our potential returns. This is where deep analysis of companies and regular tracking of their fundamentals will help.
Other assets may protect money for some time, but they do not grow money consistently over long periods. It is a more serious concern than this plain statement is probably communicating. When the idea is to build long term wealth, reliable growth is all that investors want.
- Gold and silver are good for stability, not for wealth creation. They perform well during a crisis or high inflation, but over 15–20 years, their returns are usually lower than equities.
- Overseas markets help in diversification, not because they always give better returns.
- Crypto is still new and very volatile. Early investors made money, but that does not guarantee similar returns going forward.
I think the solution is not to move away from equity, but to balance our emotions (what’s going in your mind) with diversification.
If your goal is long-term wealth creation, equity should remain the core of your portfolio. Other assets should support it, not replace it.
When your goal shifts to income or capital protection, then allocation can change. Till then, staying disciplined matters more than chasing what is currently popular.
Disclaimer: This content is for informational purposes only and should not be considered investment advice.
