While investors have been increasing their equity holdings over the past few months, driving the S&P BSE Sensex and Nifty 50 to record highs, it is silver that has delivered the best return in the first half of 2024 (H1-CY24), with gains exceeding 30 percent during this period.
Data shows that over 20-year and 10-year periods, Nifty has outperformed MCX gold returns. However, in the past five years, gold has outpaced Nifty, delivering a 16.21 percent return compared to Nifty's 13.95 percent return.
With both equity and gold prices hovering around record highs. These two asset classes serve two different purposes. While equities bring in much needed growth – high returns (more than the rate of inflation) to the portfolio in the long term, gold acts as a hedge in times of uncertainty.
New investors often compare asset classes and choose the one with the highest returns, but this isn't always prudent. Gold hasn't beaten the Nifty in recent years, but over the last 20 years, it has delivered returns that are almost on par with or slightly ahead of equities.
According to Rahul Kalantri, VP commodities at Mehta Equities Ltd, investors should review their portfolios and take some profits from equities to invest in gold.
“Investors generally allocate about 10-15% of their assets to precious metals. Although gold is currently under-allocated in many portfolios, we advise investors to review their portfolios and take some profits from equities to invest in gold, with the potential for further gains after the US rate cut. We recommend raising this allocation to 30-35%,” Kalantri said.
A steady rise is expected to continue in both equities and gold in the second-half of the year.
“We are targeting a range of 25,600-26,000 for the Nifty with a mid-term outlook, while gold could reach levels of 81,500 by the year-end. Amid these conditions, investors should adopt a balanced approach and allocate funds based on their risk profiles,” said Ajit Mishra- SVP, Research, Religare Broking Ltd.
