With winter fast approaching, the festivities are already upon us! But amid the festive cheer and spending, you shouldn’t miss out on the golden goose hiding across a basket of investment avenues. Wondering which ones? Read on.  

Which are the top-performing investment classes this season?

1. Gold

Festivals in India are almost incomplete without gold investments. Yes, the recent price corrections might have put a damper on their potential returns, but the long-term profit is still intact.

Historically speaking, gold’s price appreciates at a rate higher than inflation over a longer term.  It has delivered nearly 8% of annualised returns in the past 5-year performance. 

Besides, there’s also the added benefit of achieving risk-adjusted returns and rebalancing your portfolio.

2. Mid & small-cap stock funds

This Samvat, various mid & small-cap stock funds have seen a stellar bull run, recording returns of 18% in the first quarter alone. To the surprise of many, the S&P BSE Smallcap index rose to 40% in 2021.

This surge is mainly because of the growing investment in the chemical industry and China-plus-one induced structural shifts, which comprises a large chunk of the funds’ portfolio. Some of these small-cap companies are even positioned well for becoming midcap companies, so the rise is meant to last.

So a bit of aggression now can prove advantageous later, provided you’re selective and paying due diligence while allocating portfolio shares for the longer term.

Additional Read: Investing in different asset classes based on their risk

3. Corporate bond funds

Yes, there’s more juice in equity mutual funds, but investing in bonds can bring good mid-term returns to the table, including greater peace of mind. What’s more, they’re eligible for indexation benefits, so you’re likely to gain tax-efficient interest. That’s why many mutual fund advisors recommend them for portfolio diversification.

This is also because, according to SEBI norms, these funds can invest a minimum of 80% of their corpus across AAA rated corporate bonds. So, there’s lower credit risk involved.

However, if you’re looking for shock absorbers during falling markets, best to avoid bonds that are highly correlated with equities.

Below, we’ve highlighted the year on year returns of the three most liquid asset classes in the last decade.

DateCRISIL Liquid Fund IndexPrices of GoldS&P BSE Sensex
31-Dec-204.6027.8815.70
31-Dec-196.8623.7914.38
31-Dec-187.577.875.87
31-Dec-176.665.i1227.98
31-Dec-167.4811.351.95
31-Dec-158.23-6.65-5.03
31-Dec-149.21-7.9129.89
31-Dec-139.03-4.508.98
31-Dec-128.5012.2725.55
31-Dec-118.1731.81-24.71
31-Dec-105.1223.1717.43

Additional Read:  How Asset Allocation Should Change with Age

Parting thoughts

While mapping an asset’s track record is a great way to go about investing across instruments, the real gold lies in diversity; the more balanced the portfolio asset allocation, the better the portfolio’s combined returns.

So instead of focusing on a single asset class, build a balanced portfolio to weather any kind of market weather easily.

To help you sort out your investment journey this season, Tata Capital’s Moneyfy app can be the perfect companion! With our series of digital tools for researching, comparing, and predicting, find top-performing assets in a jiffy.

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