How Different Asset Classes Were In Last 10 Years

1. Sabka time aayega – Each asset class ends up coming to the top slot and then after that sooner or later goes right at the bottom.

2. Gold – it has a negative correlation, i.e. if Gold is in extreme bull markets, Indian markets are not doing well.

.. (2/n)

— Puneet Agarwal (@banyanfa) August 16, 2020

4. It has barely touched 20% in any year.

5. After Gold, the most volatile asset class is Small & Mid Caps. But then the returns are exceptional too. When this category underperforms, it can kill an entire portfolio if one is overweight in it. See over -30% in 2011, 17.
(4/n)

— Puneet Agarwal (@banyanfa) August 16, 2020

But 2020 showed many investor that this category can really burn you too via defaults.

7. Amazing contrast is International investment – No correlation with Indian equities. This is much better than Gold which is negatively correlated. 2019 & 20 are recent examples.
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(6/n)

— Puneet Agarwal (@banyanfa) August 16, 2020

This is my personal favourite to manage the risk without having to deal with negative correlation.

8. Lastly Govt Bonds – While default risk is relatively Zero, but the price movement in this category can roll many tummy. Investor generally come here for safety.

.. (8/n)

— Puneet Agarwal (@banyanfa) August 16, 2020

learnings > #assetallocation is only thing which can help. One can't forecast which asset will be at top / bottom next. If you hv a good mix and rebalance your investments, one + asset category will shield the – for that year to give smooth return journey.

— Puneet Agarwal (@banyanfa) August 16, 2020