Equities could partly drive rally, but hold on to gold and silver, says Radhika Gupta of Edelweiss MF

The key is not prediction, but preparation, Gupta told Mint in an interview. “That’s why you hold gold or silver allocations: not to time them, but because you can’t."

The biggest risk remains macro concerns, she said, adding that trade deals, both for India and globally, are critical.
If they don’t materialise, the environment could turn inflationary, something already visible in early signs from the US," she said. “If India’s trade deal isn’t concluded by March, conditions could get tougher."

Another key risk is a lack of earnings revival, Gupta pointed out. Markets have shown resilience, driven by the hope that earnings will recover in the second half, she said.

Edited excerpts:

How was 2025 from an investor and fund manager's perspective?

There wasn’t much outcome on the Nifty in 2025—an ordinary year marked by a lot of extraordinary drama. It feels like there was a lot to digest. From an investor’s perspective, one would probably say that from an equity market point of view, it was obviously not the best of years, but not a terrible one either.

Equity investing has bad, good and middling years, and this was a middling one. The benchmark indices were largely flat to slightly negative. Of course, investor portfolios, especially those with direct stock exposure, may have been hit much harder. But from an index perspective, it was a fairly normal year, albeit with a lot of drama: macro headwinds, uncertainty over which way things would move, not much bottom-up activity, and a lot of news-driven action.

A sector could be a hero one month and, because of a tweet, be in the doldrums the next. Geopolitical conflicts continued, along with uncertainty around trade deals. Overall, it was a bit of a cinematic year–full of drama.

In terms of themes, particularly those we saw in 2025, such as investing in international stocks, what do you see carrying forward into 2026?

The real all-weather theme is asset allocation. Last year saw a reversion in a few areas that had been lacklustre. In the first two terms of this government, the manufacturing- and capex-led investment theme did very well, but last year there was a clear sectoral shift towards consumption-oriented names.

Second, after a long time, India underperformed the global markets. Third was the rally in precious metals, something few would have predicted. I’ve posted on social media that silver was the small-cap of last year, but it is what it is.

The central lesson is that you can’t predict markets; asset allocation matters. With a better earnings outlook, equities could drive part of the rally this year, but the key is not prediction, it’s preparation. That’s why you hold gold or silver allocations: not to time them, but because you can’t.

In the current market environment, what would an ideal asset allocation look like across equity, debt and alternatives?

Asset allocation is always very individual, so I am cautious about prescribing one. But in a more evolved portfolio, I would favour a multi-cap approach. On the equity side, I’d allocate around 50–60%, consciously avoiding a pure large-cap bias.

I’d also retain exposure to precious metals, blending gold and silver much like large- and mid-caps within metals. Shorter-duration, tax-efficient fixed income would be part of the mix, along with an international allocation. For HNIs (high-net-worth individuals), real assets are another interesting space, as exposure to real asset-oriented products can be attractive in the current environment.

And what about copper?

There are no copper access products today. The only way to get exposure to copper is either through an international ETF (exchange-traded fund) via the LRS (liberalized remittance scheme) route or by trading futures, which very few investors do. In the mutual fund construct, we’re not allowed to launch a copper-oriented ETF.

I know many people keep asking—my inbox is full of mails on when we’ll launch a copper ETF. Investors typically look at copper for its industrial use, and to some extent, silver helps fill that gap. And silver, of course, has run up sharply.

Do you think investors should consider trimming their exposure to gold and silver at this stage?

I advise investors to regularly rebalance their asset allocations. For example, in our Multi Asset Omni Fund of Fund, we typically maintain a static allocation of 65% equity, 10% gold, 10% silver and 15% debt. In recent times, gold and silver have seen strong run-ups, so we continuously rebalance the portfolio.

Having a base allocation is important. When an asset class delivers an extraordinary run and a 10% allocation becomes 20%, it’s prudent to rebalance it down in a thoughtful manner.

Coming back to equities, you know, which are the sectors that look promising or also are there any sectors that are facing headwinds, like say maybe export-oriented companies?

India doesn’t have a very large export basket to markets like the US, but segments such as textiles and gems and jewellery will face headwinds until there is clarity on trade deals. A modest currency depreciation may offer some relief, but for now, the focus remains on domestically oriented sectors.

Two key themes stand out. First is consumption, a theme we’ve discussed all year and one that has lagged so far. Several steps taken in 2025, on personal taxation and GST, should start reflecting in both rural and urban consumption, with rural demand already picking up. Some of this should show up in festive-season numbers.

The second laggard is financials. Historically a major driver of index returns, the sector has underperformed and now offers a valuation opportunity. While capital-market-linked financials have done well due to underpenetration, the lending side is yet to fully pick up and could be interesting.

On risks, the biggest concern remains macro. Trade deals, both for India and globally, are critical. If they don’t materialise, the environment could turn inflationary, something already visible in early signs from the US. If India’s trade deal isn’t concluded by March, conditions could get tougher. There’s also a broader shift underway towards a more multipolar world.

Domestically, the key risk is a lack of earnings revival. Markets have shown resilience on the hope that earnings will recover in the second half. We need to see growth return in Q3 and Q4, ideally with India growing at 7–7.5%.

Many experts have been talking about a potential AI bubble burst, which could help redirect some capital flows towards India…

FIIs (foreign institutional investors) have been out of the market for a while, and it’s due to a mix of factors. One is AI. India is often viewed as an anti-AI trade at a time when billions of dollars are being poured into AI companies, many of which have achieved billion-dollar valuations without proven products, while the real productivity gains are yet to be fully assessed.

Another factor is uncertainty around trade deals. In addition, a significant amount of foreign capital had already entered India earlier, and some of it has simply exited after booking profits.

I don’t believe foreign investors are fundamentally negative on India. The country remains a major destination for global capital–the question is more about timing. We also haven’t seen a prolonged cycle where both DII (domestic institutional investor) and FII flows are strong at the same time.

In a nutshell, what really matters in building wealth?

I think what truly matters in the wealth-creation journey is taking a middle-path approach and recognising that, over the long term, you’re on solid footing. The real challenge is navigating the U-turns, bumps and potholes along the way that our roads are notorious for.

You do it by being well allocated. Interestingly, very few people talk about this. One reason equity pain has felt less severe this year is that Indian households have traditionally been over-allocated to gold and jewellery, and gold prices have surged. Many households hold a significant portion of their wealth in gold and silver, so they’ve been naturally asset-allocated.

To survive the long, bumpy road, you need a middle-path approach, avoiding extreme tilts towards any one asset class, whether precious metals or small caps. The temptation is to go all-in on what’s working at the time, but the way to endure is by staying balanced.

SIP is one of the tools that helps investors build wealth over time. With the introduction of the new SIF product, where does it fit within the broader investment landscape?

An SIF (specialized investment fund) is very different from SIP, despite the similar name, and it’s an exciting category—one of the reasons we felt compelled to launch a fund in this space.

Historically, the market was split between retail-neutral funds, designed for the average investor with low ticket sizes, and alternate investment fund/portfolio management scheme products, which catered to sophisticated investors with higher ticket sizes.

There was nothing in between. India’s diverse investor base, with varying levels of knowledge and needs, demanded a middle ground.

SIF bridges that gap. It combines the flexibility of alternative platforms, typically available at a ₹10 lakh ticket size, with the taxation benefits, trust, and distribution ecosystem of mutual funds. Over the last three months, we’ve seen how this flexibility allows fund managers to seize opportunities and create innovative solutions, especially in areas like tax-efficient fixed-income products, which gained demand in 2023.

These products are indeed making a comeback. Our first launch with Altiva has been very successful, and I believe SIF has the potential to become a very large category.