Gold over equity or vice versa? This asset allocation strategy has delivered notable return boost in recent years

Balanced strategies have an edge in the long run

With equity markets facing significant headwinds in 2026, portfolios with an aggressive equity allocation have emerged as the biggest laggards. In contrast, those with a meaningful exposure to gold and fixed income have provided stability, preserving capital and generating positive returns.

The balanced portfolio, with an equal allocation to equity, debt and gold, tops the 2026 rankings, highlighting the benefits of diversification across assets with a low correlation. Gold has been a key driver of outperformance, with portfolios having a larger allocation occupying top positions. It reinforces gold’s role as a hedge against market uncertainty and as a source of portfolio resilience during high volatility.

Debt has acted as a shock absorber, cushioning equity losses via a steady accrual income and lower volatility. This is important as equity markets are grappling with earnings uncertainty, valuation concerns, and global macroeconomic risks.

Over the past decade, the balanced portfolio has marginally outperformed equity-concentrated strategies. It showed that investors didn’t need to maximise equity exposure to achieve superior returns, and could get a more efficient risk-return profile by blending growth-oriented assets with a defensive allocation. While equities have driven wealth creation in the long run, a strategic allocation to debt and gold has enhanced portfolio efficiency, offering competitive returns with lower volatility and drawdowns across market cycles.

Source: ACE MF. *2026 data is YTD based on 8 June 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 returns (or portfolio returns) of the respective investment allocation. The 10-year weighted average return is based on the compounded returns of the respective assets. Benchmarks used: Equity: Nifty 500 Index; Debt: Crisil Composite Bond Index; Gold: Nippon India ETF Gold BeES.