Financial markets don’t move in neat, predictable cycles. One year, equities roar ahead. The next, they may falter while gold rallies. Debt may hum along quietly, only to surprise with steady gains when everything else is in flux. This unpredictability is also why multi-asset investing holds its ground.
Look at calendar-year returns across asset classes. In some years, gold delivered over 25% (2008, 2011), and in others it ended negative (−4.5% in 2013). Equity markets have swung, too. The BSE Sensex saw phases compounding at 15–16% annually, but for an entire decade between the 1990s and early 2000s the CAGR was a muted 3%. Debt looked dull on the surface, yet five-year rolling returns of the CRISIL Composite Bond Fund Index have averaged about 7.3% and rarely went negative.
What happens if you go all in on a single asset? You ride that wave until it breaks. Relying on equity in a consolidation decade, or overloading debt in low-rate phases, can erode returns. And gold? It is a hedge, not a magic wand; it can underperform for years. Multi-asset strategies spread those risks. When one asset lags, another often picks up the slack.
1 September 2025
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Growth, stability and protection
This isn’t diversification for its own sake. Each asset class brings something specific.
Equity is the growth engine. It builds wealth over time, but demands patience. Markets rally and stall. In a portfolio, equity plays the long game; it is the core driver, but it shouldn’t carry all the weight.
Debt provides stability. It cushions blows and funds goals with lower volatility. Over time, high-quality debt offers relatively consistent returns. Not thrilling, but useful—especially when equity turns choppy. Think of it as the seatbelt on your investing journey.
Then there is gold, and more recently silver and commodities. Gold’s real strength is not constant appreciation but what it does when the world panics. From 2006 to 2013 it delivered a 25.8% CAGR. More importantly, in high-inflation or crisis periods it may zig when equity zags. That uncorrelated behaviour lowers overall volatility.
A strong multi-asset portfolio doesn’t stop at these three. Newer options like REITs, InvITs and covered-call overlays can tweak returns or reduce volatility. Covered calls can harvest yield when equity goes sideways.
Discipline matters
Multi-asset investing doesn’t just balance assets; it enforces discipline. In euphoric markets, pure equity portfolios inflate and risk drifts higher. In sell-offs, fear drives exits. A multi-asset approach with some debt and some gold helps you ride through.
Most multi-asset strategies rebalance—selling what’s gained and buying what’s cheap. It sounds simple, yet most investors don’t. Behavioural finance shows we chase winners and fear losses. A rules-based setup nudges the opposite: sell high, buy low.
Rebalancing also adds value. The goal is a smoother journey and fewer nasty surprises, not a yearly chase for the top performer. It helps investors stay invested across full market cycles. Trimming overheated equity and adding to under-owned assets lowers average cost and keeps compounding efficient.
Multi-asset investing isn’t conservative; it’s adaptive. In a world that changes quickly and often irrationally, that edge matters. For retail investors, building and maintaining a true multi-asset portfolio is hard—tracking instruments, rebalancing and taxes. Multi-asset mutual funds simplify this by managing allocation, execution and tax reporting in one product.
Disclaimer: The Views are Personal and not a part of the Outlook Money Editorial Feature
