70% in Debt and Gold Helped Cut Downside Risk in FY26: Ametra PMS CIO Explains Strategy
Investors often look for safety when markets turn volatile. In the financial year 2025-26, many portfolios faced sharp swings. But one portfolio management service (PMS) firm used a simple yet powerful strategy to protect its clients. Ametra PMS, through its Co-founder and Chief Investment Officer Karan Aggarwal, revealed how a tactical allocation of 70% into debt and gold helped cushion the blow during turbulent times.
The approach was not about chasing high returns. Instead, it focused on reducing downside risk. This means the strategy aimed to lose less money when markets fell. For general investors, this is a key lesson. Protecting capital during bad times can be more important than making big gains during good times.
Why Debt and Gold?
Debt instruments, such as bonds and fixed-income securities, are known for their stability. They provide regular interest income and are less volatile than stocks. Gold, on the other hand, is a traditional safe-haven asset. Its price often rises when other markets fall. By holding 70% of the portfolio in these two assets, Ametra PMS created a strong buffer against market declines.
Karan Aggarwal explained that this tactical allocation was not random. It was based on careful analysis of market conditions. The team observed signs of volatility early in the fiscal year. They decided to shift a large portion of the portfolio away from equities and into safer assets. This move helped the portfolio stay steady even when stock markets dropped sharply.
How the Strategy Worked in Practice
Consider a simple example. If an investor had a portfolio of Rs 1 crore, a 70% allocation to debt and gold would mean Rs 70 lakh in these safe assets. Only Rs 30 lakh would be in equities. When stock markets fell by 10%, the equity portion would lose Rs 3 lakh. But the debt and gold portion might stay flat or even rise. This reduces the overall loss significantly.
In FY26, this approach proved effective. While many equity-heavy portfolios saw double-digit declines, Ametra PMS clients experienced much smaller drawdowns. The strategy did not aim for the highest possible returns. Instead, it aimed for consistent outcomes across different market cycles. This means the portfolio performed reasonably well in both good and bad times.
Combining Asset Diversification and Factor Investing
Ametra PMS did not stop at just asset allocation. They also used factor investing. This is a method where you select stocks based on specific characteristics, such as value, quality, or low volatility. By combining asset diversification with factor investing, the firm added another layer of protection.
For example, within the equity portion, they chose stocks that were less risky and had strong fundamentals. These stocks tend to fall less during market downturns. This further reduced the overall risk of the portfolio. The combination of a heavy debt and gold allocation with careful stock selection created a robust defense against market volatility.
What General Investors Can Learn
This strategy offers valuable lessons for everyday investors. First, diversification is not just about owning different stocks. It is about owning different types of assets. Debt and gold can act as shock absorbers when equities struggle. Second, having a tactical approach matters. You do not have to stay fixed in one allocation forever. Adjusting your portfolio based on market conditions can help protect your money.
Third, focus on downside protection. Many investors only look at potential gains. But avoiding big losses is equally important. A portfolio that loses 20% needs to gain 25% just to break even. By limiting losses, you make it easier to recover and grow your wealth over time.
Looking Ahead
Karan Aggarwal noted that this strategy is not meant for all seasons. When markets become more stable, the firm may shift back to a higher equity allocation. But for now, the focus remains on safety and consistency. For investors who are risk-averse or nearing retirement, such an approach can be very suitable.
In summary, Ametra PMS showed that a 70% allocation to debt and gold can effectively cut downside risk. By combining asset diversification with factor investing, they delivered steady results even in a volatile year. This case study highlights the importance of smart asset allocation and risk management in building a resilient portfolio.
