What is Multi-Asset Allocation?
Multi-asset allocation involves investing your money across different asset classes, such as domestic equity, debt, gold, and international equity. A balanced allocation might consist of 50% in domestic equity, 20% in debt, 15% in gold, and 15% in international equity. This type of diversification can help reduce risk and provide more stable returns over time.

India’s Performance with Multi-Asset Allocation
Over the last 20 years, India has experienced an average inflation rate of around 6.5%. During the same period, domestic equity has yielded returns of 12.9%, debt has returned 7.4%, international equity has provided 9.2%, and gold has offered 13.1%.

If an investor had followed the multi-asset allocation suggested, they would have achieved an average return of 12.4%. Although this is slightly lower than the returns from domestic equity alone, the key advantage is the reduced risk.

Lower Risk through Asset Mix
Investing solely in domestic equity may yield high returns, but it also comes with a high standard deviation of 21.3%, indicating larger fluctuations in value. In contrast, a multi-asset portfolio has a standard deviation of only 11.3%, resulting in a smoother investment experience with fewer significant drops in portfolio value. This stability helps investors remain calm and committed to their investments over the long term.

How This Works in the U.S. and Other Countries
Similar trends have been observed in the U.S. and other nations. In the U.S., domestic equity averaged returns of 8.2%, while gold provided 9.3%. The overall return from a multi-asset portfolio was 7%, with the standard deviation decreasing from 19% to 11%. Thus, multi-asset portfolios globally have delivered good returns while minimizing volatility.

Why This Strategy is Beneficial in the Long Run
The primary advantage of multi-asset investing is the peace of mind it offers. When domestic equity underperforms, gold or international equity can bolster your portfolio. This balance reduces the likelihood of panic selling during downturns, allowing investors to remain invested for years and ultimately achieve better long-term returns.

Is your portfolio diversified across assets—or riding on a single engine? Share your thoughts in the comments below! If you found this blog useful, don’t forget to SHARE it with your friends!

WeekendInvesting launches – The Momentum Podcast

In this episode of the Momentum Podcast by Weekend Investing, Alok Jain sits down with Mr. Thomas, a passionate retail investor, to uncover his remarkable journey—from exiting the markets at the worst possible moment during the 2020 crash to finding clarity and consistency through momentum investing.

Topics Covered:

✅How a train journey sparked his interest in the stock market

✅Emotional investing mistakes & lessons from the COVID crash

✅Why he shifted from value to momentum-based strategies

✅The Weekend Investing system that gave him peace of mind

✅How he balances aggressive bets with long-term wealth-building

Whether you’re just starting out or navigating your own investing style, this episode is packed with relatable stories and actionable insights.