adjusted returns over 25 years: WhiteOak study

How mixing debt, equity and gold shaped risk-adjusted returns over 25 years: WhiteOak study WhiteOak Capital Asset Management study shows combining debt, equity and gold improves risk-adjusted returns, with gold offering downside support and measured diversification aiding long-term goals. By Anshul A new study by WhiteOak Capital Asset Management analyses how different combinations of debt, equity and gold have historically influenced portfolio risk and return, suggesting that measured diversification may improve risk-adjusted outcomes over time. The February 2026 edition of its “Chemistry of Investing” study evaluates rolling one-year returns between September 2001 and January 2026. The analysis uses the CRISIL 10 Year Gilt Index as a proxy for debt, the BSE Sensex TRI for equity, and MCX Gold INR for gold. The fund house said the exercise aims to explain structural aspects of portfolio construction rather than offer specific investment recommendations. Modest equity exposure and volatility Over the period studied, a 100% debt portfolio generated an average annual return of 6.87% with volatility of 6.40%, based on daily rolling one-year data. Introducing equity altered the risk-return profile. A 90% debt–10% equity mix delivered an average annual return of 8.09%, higher than the all-debt portfolio, while volatility measured 5.75%, lower than the 6.40% recorded for 100% debt. An 80% debt–20% equity combination produced 9.32% average returns with volatility of 6.35%, nearly similar to the all-debt portfolio’s volatility but with higher returns. At 75% debt–25% equity, the portfolio generated 9.94% average returns with 7.05% volatility. As equity allocation increased further, both average returns and volatility rose progressively. A 50:50 mix recorded 13.01% returns with 12.39% volatility, while a fully equity portfolio delivered 19.15% average returns with 25.44% volatility over the same period. The findings indicate that small allocations to equity did not always raise overall portfolio volatility and, in some combinations, improved return outcomes relative to pure debt over the study horizon. Adding gold as a third asset The study also examined portfolios that included a 20% allocation to gold alongside debt and equity. A portfolio comprising 55% debt, 25% equity and 20% gold delivered an average annual return of 11.55% with volatility of 6.85%. This volatility level was close to that of the 100% debt portfolio, while returns were higher than the 6.87% recorded for pure debt over the same timeframe. Other combinations showed similar patterns. For instance, a 70% debt–10% equity–20% gold portfolio generated 9.70% average returns with 5.50% volatility, while a 60% debt–20% equity–20% gold mix delivered 10.93% returns with 6.13% volatility. According to the study, asset classes with low or negative correlations can alter overall portfolio dynamics. Gold, it noted, has provided downside support in several years when domestic equities posted negative returns, and vice versa. Diversification and long-term allocation WhiteOak Capital said economic cycles and market trends remain dynamic, making it difficult to consistently identify the best-performing asset class in advance. Instead, combining assets with differing correlation characteristics may help investors pursue improved risk-adjusted returns aligned with long-term financial goals. The fund house added that the data analysis is illustrative and does not represent the performance of any specific scheme. Past performance, it said, may or may not be sustained in the future. Note To Readers Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.