By buld_online 
In today’s volatile financial landscape, where inflation spikes, geopolitical tensions, interest rate swings, and equity market corrections routinely make headlines, investors face the key challenge of generating long-term returns without being overwhelmed by short-term risks.
The Traditional Approach
For years, the traditional approach has relied heavily on a single asset class. However, a decade of data (CY 2015–2024) offers a compelling story: no single asset class consistently outperformed across all market environments. Equity, fixed income, and commodities have all taken turns leading and lagging (see fig 1).
In CY 2015, in terms of returns, fixed income led the way, providing a safe haven during a period of market caution. The next year, the baton passed to commodities. This leadership rotated once again in CY 2017, as equities delivered a standout performance (see fig 1).
However, in a clear demonstration of how market dynamics evolve, commodities reasserted dominance in the following three calendar years.
Also, various asset classes such as equities, fixed income, gold, and silver have consistently exhibited distinct return behaviors during comparable phases of the market cycle. Consider the contrasting dynamics observed across two distinct bull market phases.
During the period from December 10, 2011, to March 1, 2015, equities delivered a stellar return, significantly outperforming other asset classes, while gold and silver declined (see fig 2).
However, in a more recent equity rally from April 1, 2023, to September 27, 2024, while equities still led in terms of return, the performance gap narrowed considerably. Gold and silver delivered robust returns, and fixed income generated a stable return (see fig 2).
This divergence underscores the fact that different types of investments tend to respond in unique ways to similar macroeconomic or financial conditions (see figure 2).
Note – BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Gold returns, Price of Silver is considered to depict Silver returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns(F.I.).
Note – Returns calculated are on absolute basis for the referred period and are rebased to 100. Disclaimer: Past performance may or may not be sustained in the future. Source: MFI Explorer, Bloomberg
The data/statistics are given only to explain how different asset classes have varying levels of returns in different market phases. The above information should not be construed as any guarantee or indication of future results.
The MAAS Advantage: Consistency Through Chaos
The numbers make it evident that no asset class provided consistent leadership across all cycles. Having said that, the variability is not a flaw but a feature. When harnessed properly, it becomes a powerful diversification tool through multi-asset allocation strategy (MAAS).
By strategically distributing capital across different asset classes, investors can effectively manage risk and aim to achieve consistent returns over time. This diversified approach helps to reduce volatility, smoothen fluctuations in returns, and enhance a portfolio’s overall resilience.
By spreading investments across various asset classes, such as equities, debt and commodities, investors can aim to ensure that the underperformance of one asset class is offset by the better performance of another. This dynamic approach to asset allocation can help the portfolio against market swings and economic downturns.
Also, examining the calendar year returns of the MAAS framework in comparison to individual asset classes paints a clear pattern of consistency and resilience. While MAAS recorded negative returns in CY 2015, it quickly rebounded with a gain in CY 2016 and further strengthened to deliver returns in CY 2024 (see fig 3).
Unlike standalone asset classes that often experience sharp fluctuations due to cyclical pressures, MAAS demonstrates an ability to cushion downside risks and capture upside potential, underscoring its value as a core allocation strategy in uncertain and dynamic market environments (see figure 3).
Fig 3
Note – BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Commodity returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns.
Source: MFI Explorer, Bloomberg. Note – Calendar Year Returns are point to point returns for calendar year; Data from 1st Jan 2015 to 31st Dec 2024; Disclaimer: Past performance may or may not be sustained in the future.
The data/statistics are given only to explain how different asset classes have delivered varying returns. The above information should not be construed as any guarantee or indication of future returns.
Also, the 3-year daily rolling CAGR analysis shows MAAS helps in optimizing returns with markedly less volatility. This suggests that MAAS offers a compelling risk-adjusted performance, providing investors with near-equity-level growth while minimizing the fluctuations typically associated with more volatile asset classes (see fig 4).
Fig 4
Note – BSE 200 TRI is considered to depict equity returns, Price of Gold is considered to depict Gold returns, Price of Silver is considered to depict Silver returns & Nifty Short Duration Debt Index is considered to depict Fixed Income returns(F.I.).
*MAAS (Multi Asset Allocation Strategy)= 65%* BSE 200 TRI + 20%*Nifty Short Duration Debt Index + 10%*Price Of Gold + 5%*Price Of Silver Source: MFI Explorer, Bloomberg. Note- Returns are 3 Year CAGR Returns as on Daily Rolling Basis;
Data from 1st Jan 2015 to 31st Mar 2025.; Disclaimer: Past performance may or may not be sustained in the future.
The data/statistics are given only to explain how diversifying the portfolio amongst different asset classes helps in better risk adjusted returns with lower volatility. The above information should not be construed as any guarantee or indication of future results or returns of MAAF as a category.
According to Brinson’s study, often regarded as one of the most comprehensive research efforts in portfolio management, 91.5% of a portfolio returns can be attributed to asset allocation decisions rather than market timing or individual security selection.
In Conclusion
The future of investing doesn’t lie in choosing between equity, debt, or gold and silver but in integrating all of them. As markets become more complex, portfolios must evolve to remain resilient, responsive, and results-oriented.
The author is Head of Equities, Canara Robeco Asset Management Company Limited