New high, old advice: Spread your portfolio across assets to do well

economictimes.indiatimes.com:

trading at new lifetime highs, wealth managers are seeing enquiries from investors on how they should approach the markets. And most out there give the same advice: stick to long-term goals and maintain asset allocation — which means diversifying portfolios across different assets such as equity, fixed income, and gold.

«Asset allocation determines as much as 90% of the long-term returns of an investor's portfolio,» said Misbah Baxamusa, CEO of NJ Wealth.

Maintaining asset allocation is a continuous process and should be carried out whenever there is a sharp rise in one of the asset classes, he added.

Over the last year, the Nifty 50 moved up by 13.64%, while the Nifty Midcap 150 rose 35.91% and the Nifty Smallcap 250 rose 39.03%.

This rally in stocks would have increased investors' allocation to equity and reduced it to debt and gold.

«It is a time to review and rebalance investor portfolios,» said Nasser Salim, managing partner at Flexi Capital LLP, a boutique investment services firm.

Financial planners believe investors should carry out this exercise once every six months or a year. Conservative retail investors could have a 65% allocation to equities, a 25% allocation to fixed income, and a 10% allocation to gold.

It is time to come back to this allocation, they say.

«Investors with such higher equity allocation to mid- and small-cap funds could book some profits and reallocate money to other assets such as fixed income and gold,» said Nirav Karkera, head of research at Fisdom.

Wealth managers believe investors could allocate to fixed income using debt funds as rates are attractive and there is a chance that investors could earn a capital appreciation in the coming year. «There is a chance of a rate cut in