Canindia News

Asset class difficult to predict, build mixed portfolio

New Delhi, Jan 1 (IANS) The decadal story of returns from asset classes from 2010-2019 only illustrates the fact that there is no pattern on how much return an asset class will give and building a mixed portfolio is perhaps the only answer to mitigate risks and inflation.

For instance, in the 10 years from 2010-2019, the top performing asset class has varied almost every year.

Gold gave a return of 24 per cent in 2010 and 29 per cent in the next year to bag the top spot, thereafter mid-cap stocks at 38.52 per cent was the best in asset class in 2012, international assets at 29.60 per cent was at the top in 2013, small cap stocks with 62.91 per cent in 2014, credit risk with 10 per cent return was the only double digit return in a year when no asset class seemed to work.

In 2016, G-sec with 15 per cent returns was the best category at a time when the plain vanilla categories were performing well, it was back again to small caps and risk on trade in 2017 which gave a stupendous return of 59.64 per cent.

In 2018, another risk averse and safety seeking year, gold was the best asset class with 8 per cent returns and in 2019, international assets was the best class at 29.31 per cent returns.

An analysis of the top 10 asset classes over 10 years shows the absence of any pattern in the returns of asset classes from one year to the next and emphasises the importance of asset allocation to build a portfolio against trying to predict the next winning asset class.

A diversified portfolio of stocks, bonds and physical assets is the key to steering through every market trend. Such a portfolio may not give the highest returns in any given year but will perform in a competitive manner across market cycles.




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