The study found that a portfolio comprising entirely of debt had an average annual return of 6.76% and volatility of 6.37% over the period considered. When 10% equity was added to the portfolio, the average return rose to 7.95%, while volatility fell to 5.76%.
With a 75% debt and 25% equity allocation, the average annual return increased further to 9.74%, while volatility stood at 7.09%. The report notes that this volatility was relatively close to that of the 100% debt portfolio, although the return was higher.
The analysis is based on one-year rolling returns calculated daily, with debt represented by the CRISIL 10 Year Gilt Index and equity by the BSE Sensex TRI. WhiteOak said the exercise was intended to illustrate the concept of multi-asset allocation and does not represent the performance of any particular scheme.
What changes when gold is added
The study also examined the effect of adding gold as a third asset class. It found that a portfolio with 55% debt, 25% equity and 20% gold recorded an average annual return of 11.59% and volatility of 6.81% over the same period.
For comparison, the 100% debt portfolio had an average return of 6.76% and volatility of 6.37%, while the 75% debt and 25% equity portfolio generated 9.74% with volatility of 7.09%.
According to the report, the addition of gold shifted the return-volatility combinations towards lower volatility across the portfolio mixes examined. Gold in the analysis is represented by MCX Gold in rupee terms.
The broader argument in the study is based on the correlation between asset classes. Using annual returns from January 2010 to August 2026, the report puts the correlation between Indian equity and gold at -0.43, while Indian equity and debt had a correlation of -0.06. Gold and debt had a correlation of 0.10.
Gold’s performance has differed from equities
The report’s historical data also illustrates why combining asset classes can produce different outcomes across market cycles. For instance, in FY2020, the BSE Sensex TRI fell 22.86%, while MCX gold in rupee terms gained 29.71%. In FY2021, the Sensex TRI gained 69.82%, compared with a 7.33% gain for gold.
In FY2026, gold gained 64.76%, while the Sensex TRI declined 6.01%, according to the report. For FYTD 2027, the corresponding figures were a 7.82% gain for the Sensex TRI and a 6.15% gain for gold.
The report also presents a sample multi-asset allocation comprising 25% domestic equity, 45% debt, 25% gold and 5% US equity, with annual rebalancing to the predetermined weights. It cautions that changing the allocation can produce different results and that the historical analysis should not be treated as an indication or guarantee of future returns.