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A recent report by FundsIndia has highlighted that the asset allocation is the one of the most important drivers for determining the long-term returns.
The report has pointed out that the exposure to gold and debt reduces volatility in investment portfolio without affecting the long term return potential of the portfolio.
Here are the key trends in the long-term returns around various asset allocation scenarios:
- 5 year rolling returns data shows that 79% of the times, a 70% equity and 30% debt portfolio has delivered a return of more than 10%
- 7 year rolling returns data shows that 86% of the times, a 70% equity and 30% debt portfolio has delivered returns of more than 10%
- In terms of rolling returns in 5 year period, 84% of the times, a 70% equity, 15% debt, and 15% gold portfolio has delivered returns above 10%
- While over a period of 7 year in terms of rolling returns, 91% of the times, a 70% equity, 15% debt, and 15% gold portfolio has delivered returns above 10%
Here are the average returns over 5 rears and 7 years period for various asset allocation strategies for equity and debt assets
|
Time period |
Equity – 70% Debt – 30% |
Equity – 50% Debt – 50% |
Equity – 30% Debt – 70% |
Nifty 50 TRI |
S&P 500 TR |
|
5-years |
14% |
13% |
11% |
16% |
11% |
|
7-years |
14% |
13% |
11% |
15% |
12% |
Asset allocation and respective returns among equity, debt and gold
|
Time period |
Equity – 70% Debt – 15% Gold – 15% |
Equity – 50% Debt – 25% Gold – 25% |
Equity – 30% Debt – 35% Gold – 35% |
Nifty 50 TRI |
S&P 500 TR |
|
5-years |
16% |
14% |
13% |
16% |
11% |
|
7-years |
15% |
14% |
13% |
15% |
12% |
