Why asset allocation issues: Traders chase equities, however greatest positive factors have been elsewhere

Whereas Indian buyers proceed to pour crores into equities, the previous yr’s efficiency knowledge tells a distinct story. The Nifty 50 has slipped 2.9% over the past 12 months, whereas gold has delivered 46.71% returns and silver has surged 47.08%, making treasured metals the best-performing asset class.

“Valuable metals have quietly emerged as wealth creators at the same time as equities have struggled,” stated Jahol Prajapati, Analysis Analyst at SAMCO Securities.

Equities get the flows

In line with AMFI knowledge, fairness scheme inflows hit a file Rs 42,702 crore in July 2025, the very best ever. Systematic Funding Plan (SIP) contributions are additionally at all-time highs, reflecting retail buyers’ religion in equities as their major wealth-creation avenue.

This comes at a time when the Nifty has didn’t generate constructive returns, underlining the hole between investor conduct and asset-class efficiency.

Valuable metals under-owned

In distinction, publicity to gold and silver stays negligible in mutual fund portfolios. Out of India’s whole Rs 77 lakh crore mutual fund AUM, Gold ETFs account for simply Rs 66,660 crore and Silver ETFs account for Rs 22,160 crore. Collectively, that’s barely 1.15% of business property.

“Regardless of delivering standout returns, treasured metals stay severely under-owned in investor portfolios,” Prajapati identified.

The asset allocation lesson

The takeaway is to not abandon equities, however to acknowledge the position of diversification. Strategic allocation to gold and silver might help buyers cushion their portfolios throughout unstable fairness cycles whereas capturing efficiency from non-correlated property.“Asset allocation is the important thing. A well timed slice of gold and silver can add each efficiency and safety when markets flip uneven,” Prajapati stated.

Asset allocation is the follow of diversifying investments amongst totally different asset lessons equivalent to equities, bonds, and treasured metals. The aim is to steadiness danger and reward by putting bets in several baskets. Since asset lessons carry out in a different way beneath various financial circumstances, a well-allocated portfolio can cushion towards losses throughout downturns and supply extra steady, long-term returns.

(Disclaimer: Suggestions, recommendations, views and opinions given by the specialists are their very own. These don’t symbolize the views of the Financial Occasions)