The asset-class conundrum: Where should investors allocate money now?

Investors immediately face a tough query: which asset class nonetheless provides significant worth after years of sturdy returns throughout markets? In response to the February 2026 version of DSP’s Netra report, the reply just isn’t simple — as a result of most main asset lessons have already delivered sturdy positive factors over the previous 5 years.

When the whole lot appears costly

The report highlights that equities, commodities and international markets have all seen important run-ups, leaving fewer apparent bargains for investors.

Even after current corrections:

The Nifty 500 and mid- and small-cap indices stay within the seventieth–ninetieth percentile of historic returns and valuations, which means they’re nonetheless comparatively costly in contrast with long-term averages.

World equities additionally seem stretched, with elevated valuations and robust trailing returns.

Gold and silver look essentially the most prolonged, with five-year returns within the 99th percentile of their historic vary, signalling excessive efficiency relative to historical past.

This creates what the report describes as an “asset class conundrum” — sturdy previous efficiency has made future allocation choices extra advanced.

Debt and huge caps stand out

In distinction to costly asset lessons, the report means that debt investments and home large-cap equities seem comparatively extra engaging at present ranges.

Debt markets, specifically, haven’t seen the identical valuation enlargement as equities or commodities, providing comparatively higher consolation for investors looking for stability and predictable returns.

Multi-asset investing often is the answer

Given the dearth of clear bargains throughout asset lessons, DSP means that multi-asset methods may very well be a wise approach to navigate the present atmosphere.

These methods enable investors to:

Shift allocations dynamically throughout asset lessons

Scale back focus danger

Handle volatility extra successfully

Seize alternatives as valuations change

“The asset lessons that appear to supply some consolation are the much-ignored debt (appears engaging relative to equities) and, to some extent, home giant cap equities. So how should one navigate this atmosphere? We imagine multi-asset methods with agility to rapidly regulate throughout totally different asset lessons could be a smart choice,” mentioned the report. 

A reminder about market cycles

One other key takeaway from the report is that markets have skilled an unusually lengthy interval of comparatively low volatility and restricted drawdowns, which can not final indefinitely.

Fairness markets in India have gone almost a decade and not using a extended bear market, and traditionally such durations are sometimes adopted by phases of upper volatility.

For investors — particularly newer ones — this implies getting ready portfolios for fluctuations moderately than assuming regular returns.

What about gold and silver? 

One of many report’s key observations is that each gold and silver have delivered exceptionally sturdy five-year returns, putting them on the excessive finish of historic efficiency ranges.

In response to the information:

• 
  Gold’s five-year returns are within the 99th percentile of historic returns
• 
  Silver’s five-year returns are additionally within the 99th percentile

• 
   

This means that the current rally in valuable metals is unusually sturdy in contrast with long-term traits.

Even after current corrections, the report says valuable metals stay among the many most “stretched” asset lessons in valuation and return phrases.

What investors should do now

The report means that the present atmosphere just isn’t about abandoning gold and silver, however about utilizing them strategically moderately than tactically.

Treasured metals proceed to play an essential function in portfolios as:

• 
  inflation hedges
• 
  geopolitical danger hedges
• 
  diversification instruments

Nonetheless, given elevated returns and valuations, investors could must:

• 
  keep away from aggressive new allocations
• 
  keep balanced publicity
• 
  accumulate regularly moderately than chasing worth momentum

The larger funding lesson

The sturdy efficiency of gold and silver highlights a broader theme in international markets: investors are getting ready for uncertainty even when markets seem calm.