Portfolio diversification is key but what is the best equity, debt, gold mix? 7 asset combinations compared over 10 years

Synopsis

For best portfolio results, it’s best not to get swayed by any one asset class. Experts recommend diversification. While asset allocation is the way to go, the question remains: what is the best combination? Every investor has their own asset allocation. Here’s a start. In this week’s TrendMap, ET Wealth compares seven asset combinations. Portfolios with gold have delivered a notable returns boost in recent years, while those with zero gold exposure have persistently lagged. By Sameer Bhardwaj.

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Limited dispersion across strategies over 10 years

The year-to-date performance in 2026 underscores the value of diversification. While aggressive equity-heavy strategies tend to shine in strong bull markets, the early months of 2026 rewarded investors who maintained exposure to uncorrelated assets such as gold and debt. These allocations provided an effective buffer against heightened equity volatility.

The best-performing strategy was the evenly diversified portfolio, benefiting from the absence of concentration risk and its ability to absorb shocks in a market lacking a clear directional trend. Close behind was the more conservative allocation with 60% exposure to debt, reinforcing the idea that higher debt allocations have remained relatively resilient.

In contrast, strategies with 60-70% equity occupied the bottom three positions. Gold emerged as a critical stabiliser: the portfolio with zero gold exposure suffered the steepest decline, falling 2.7%.

Source: ACE MF. *2026 data is YTD based on 28 April 2026 closing values. Other years’ returns are calculated between the first and the last trading day closing values. Numbers in brackets are the weighted average return (or portfolio return) of the respective investment allocation. The 10-year weighted average return is based on compounded returns of the respective assets. Benchmarks used: Equity: Nifty 500 Index, Debt: Crisil Composite Bond Index, Gold: Nippon India ETF Gold BeES.

Long-term performance

The 10-year performance underpins the importance of multi-asset diversification, with all seven strategies delivering double-digit Compounded Annual Growth Rate (CAGR) returns. While the portfolio with higher equity exposure (70% equity) drives long-term returns, the evenly diversified portfolio follows closely. This indicates that a strictly balanced approach can match aggressive equity strategies in the long-run.