A robust multi-asset strategy enables investors to align their assets with evolving market realities, ensuring resilience and growth even in unpredictable market environments
India’s recent chess triumphs, with double gold at the Chess Olympiad and rising stars like Gukesh, Vaishali, and Praggnanandhaa, highlight strategic brilliance. What if this same mindset applied to investing? Like chess, multi-asset investing demands constant strategy, adaptation, and fighting through challenges. Balancing equities, debt, gold ETFs, silver ETFs, and REITs & InVITs creates a robust, all-weather portfolio, ready to seize opportunities and mitigate risks.
Just as a chess player must navigate unpredictable moves from their opponent, a well-balanced multi-asset portfolio helps fight volatility by leveraging the strengths of each asset class to weather market fluctuations.
Equities: The Queen
The queen dominates the chessboard, just as equities drive portfolio growth. They offer high returns, as seen in the robust performance of India’s benchmark indices (10-year CAGR of 11%). However, with recent bouts of correction, equities remind us of their volatility.
Debt: The King
Stability is the king’s hallmark, much like debt instruments that anchor a portfolio during turbulent times. Government bonds and fixed-income securities provide steady, predictable returns, balancing the risks of equities
Gold ETFs: The Rook
Gold ETFs are the defenders, protecting your portfolio during economic uncertainty. Indians have always valued gold. Today, Gold ETFs make it easier and low-cost to invest in this trusted inflation hedge without worrying about storage.
Silver ETFs: The Bishop
Like bishops with their diagonal moves, silver offers a unique perspective in the portfolio. Silver ETFs benefit from both industrial demand and its role as a precious metal. In recent years, silver has gained popularity as an affordable complement to gold in households.
REITs & InVITs: The Knight
Knights add an element of surprise with their unconventional L-shaped moves, akin to REITs and InVITs. REITs, focussing on real estate, and InVITs, specialising in infrastructure assets, offer unique investment avenues with potential for uncorrelated returns and diversification benefits
In an era marked by heightened market volatility and increasingly short business cycles, multi-asset investing has become a cornerstone of effective portfolio management. As seen above, each asset class reacts differently to varying business cycles and market conditions, underscoring the need for a diversified approach that adapts dynamically to these shifts.
A robust multi-asset strategy that combines both fundamental and technical approaches to portfolio allocation is pivotal for achieving long-term compounding and portfolio stability. It enables investors to align their assets with evolving market realities, ensuring resilience and growth even in unpredictable environments.
The analogy of the boiling frog is particularly apt in today’s market conditions. Business cycles are becoming shorter and more unpredictable, and failing to adapt can lead to gradual portfolio erosion. Multi-asset mutual funds, with their dynamic switching model, ensures proactive reallocation into the right asset class at the right time, shielding portfolios from adverse market trends while capturing growth opportunities.
In the endgame, chess players secure victory with the right moves by carefully safeguarding their position. Similarly, multi-asset investing prioritizes wealth preservation and consistent income generation as investors approach financial milestones. By strategically balancing equities, debt, gold, silver, and other assets, this approach provides stability and sustainable growth across all market conditions.
With the rise of multi-asset mutual funds, Indian retail investors can now easily access diversified portfolios without needing extensive expertise. This offers a convenient way to balance risk and returns.
Disclaimer: The Views are Personal and not a part of the Outlook Money Editorial Feature