Is Your Investment Portfolio Missing Any Colour?

Holi, the vibrant festival of colours, is a celebration that brings together people from all walks of life to enjoy the beauty of diversity. During this festival, powders of every hue are thrown into the air, creating a display of colours that represent joy and unity. Just as Holi would be incomplete without its full spectrum of colours, a portfolio without proper diversification may be missing out on growth potential and stability.

The Importance of Diversification

Diversification involves spreading investments across various assets like equity, debt, gold etc. The aim is to reduce risk by ensuring that not all investments are affected by the same economic factors. This approach helps to balance risk and maximize potential returns over time.

Below table shows the performance of different asset classes over the last 22 financial years. It is interesting to note that out of 22 financial years since FY2003, equity has been the best performing asset class in 13 years. Debt and gold have been the best performing asset classes in 2 and 7 years respectively.

Source: -MFI, www.niftyindices.com. Data from March 31, 2002 to March 31 2024. *Equity -NIFTY50 TRI,

**Debt - Nifty Composite Debt Index and Gold price is from World Gold Council, Spot Rate INR/10 Grams.

Past performance may or may not be sustained in future and is not a guarantee of any future returns. HDFC AMC/Mutual Fund is not guaranteeing or promising or forecasting any returns. The recipient(s), before taking any decision, should make their own investigation and seek appropriate professional advice.

Just like Holi is about embracing a wide range of colours—each with its unique symbolism—you can consider adding variety of asset classes to your investment portfolio. Each asset, whether it be equity, debt, or gold, represents a “colour” that adds a different dimension to your portfolio

How can investors add the right colour to the portfolio?

> Determine financial goals

> Ascertain risk appetite

> Determine optimal asset allocation

> Invest in asset classes where the allocation is lower than the desired allocation

> Reduce exposure to asset classes where the allocation is higher than the desired allocation

You could consider investing in HDFC Multi Asset Fund.

HDFC Multi-Asset Fund (“The Fund”) is an open-ended scheme investing in Equity and Equity related instruments, Debt & Money Market Instruments and Gold related instruments. The Fund's strength lies in its ability to diversify across various asset classes—equities, debt, and gold—each playing a unique role in the portfolio. This diversification helps in mitigating the risk and has the potential to enhance returns, with an aim to provide a stable journey through market fluctuations.

So, this Holi, add colour to your portfolio by creating the right asset allocation.