Gold vs Equities: What’s the right diversification strategy for your portfolio?

Gold has long been seen as a safe haven during uncertain economic times, and 2025 has proven no different. With over 30% returns since last year and touching an all-time high of ₹1 lakh per 10 grams on April 22, gold has been a hot favorite for investors looking to hedge against market volatility.

Experts say gold has delivered a solid 15% compound annual growth rate (CAGR) since 2001 and has consistently outpaced inflation by 2% to 4% since 1995. According to Manoj Kumar Arora, Managing Director at Almondz Global, gold is likely to stay strong, driven by central banks buying more due to global geopolitical tensions, rising inflation, and ongoing tariff threats.

“We expect gold’s structural bull run to continue, supported by falling U.S. Treasury yields and strong central bank demand. Gold remains one of the top-performing assets for 2025,” Arora said.

Don’t Ignore Equities

While gold has performed exceptionally well, experts warn against going all-in. Diversifying across asset classes is still the smart move.

Yogesh Kansal, Co-founder and Chief Business Officer at Appreciate, suggests a balanced approach: “Allocate about 5–15% of your portfolio to gold, a similar amount to short-term bonds, and the rest in Indian and global equities.”

Kansal also noted that the stock market has faced challenges in 2025, especially due to renewed trade tensions between the U.S. and China and persistent inflation. For those who want to invest in gold without buying it physically, he recommends Nippon India ETF Gold BeES and SBI Gold ETF. Other cost-effective options include ETFs from Kotak and ICICI Prudential, with low expense ratios of 0.55% and 0.5% respectively.

For equity exposure, he advises looking beyond India and the U.S. to strong European companies like chipmaker ASML, pharmaceutical giant Novo Nordisk, and leading defense firms.

Disclaimer: This article is for educational purposes only. The views shared are those of individual analysts or brokerage firms, not Mint. Please consult a certified financial advisor before making investment decisions.