Year-end portfolio review: Should you reduce weight of gold and silver?

Small deviations may be corrected by directing more money into underperforming assets like debt and equities

The end of the year presents investors with an opportunity to review their portfolios and assess whether they remain aligned with their financial goals. While those working with financial advisors can rely on professional reviews, do-it-yourself investors should undertake this exercise themselves to prepare for the year ahead. 

Why a review matters 

A year-end review enables investors to assess how each asset class performed and whether their portfolio effectively captured those returns. “It also allows investors to rebalance their portfolios in case any part of it has grown disproportionately or lagged, thereby altering its risk profile,” says Niranjan Avasthi, senior vice president, Edelweiss Mutual Fund. 

This exercise also allows investors to realign their portfolios with changing market conditions and evolving personal objectives. 

Asset-class performance in 2025 

Gold and silver delivered strong gains in 2025. “Global economic uncertainty, along with a weaker US dollar, increased the demand for safe-haven assets. Silver also gained due to strong industrial demand and supply constraints,” says Avasthi. 

Within equities, international markets outperformed domestic ones, with the United States (US) and China performing particularly well. Among domestic equity funds, after five years of underperformance, large-cap funds beat mid-cap and small-cap funds, as elevated valuations in the latter limited further upside. Heightened volatility also led investors to favour large, stable businesses. 

Debt funds delivered modest returns, with limited duration-led gains. Low-duration, short-duration, banking and public sector undertaking (PSU), corporate bond, and medium-duration funds performed reasonably, supported mainly by accrual income. 

Rebalancing discipline 

Investors should follow a pre-defined review schedule. “The financial plan and goals should be reviewed annually, while the investment portfolio should be checked quarterly or half-yearly,” says Vishal Dhawan, founder and chief executive officer, Plan Ahead Wealth Advisors. 

Rebalancing may be required when allocations drift beyond acceptable limits. Archit Doshi, senior vice president - AMC, Prabhudas Lilladher Capital, recommends a two-tier approach. “For material buckets (for example, equity versus debt), use relative drift limits of 15–20 per cent of the target allocation. So, a 50 per cent equity target implies a 7.5 - 10 percentage-point band. For smaller sub-buckets, apply absolute bands of 3–5 percentage points,” he says. 

Sachin Jain, managing partner, Scripbox, suggests rebalancing when allocations deviate by 5 percentage points. 

Minor deviations can be corrected through fresh investments or adjustments to systematic investment plans (SIPs). “This helps avoid both tax and exit loads,” says Ankur Punj, managing director, business head, Equirus Wealth. 

Larger deviations may require selling outperforming assets. When selling, investors should try to minimise the tax and exit-load implications. “Prioritise units that have completed their exit-load periods and qualify as long-term holdings, so that you benefit from lower long-term capital gains (LTCG) tax rates and the annual exemption of ~1.25 lakh allowed on equity sales,” says Punj. 

Dhawan cautions that investors should understand the tiered exit-load structure of some funds, wherein charges reduce over time. 

Sometimes, rebalancing should take precedence over tax considerations. “One is when your goal has been achieved and the focus has shifted from growth to preservation. The other is when you want to exit a security that no longer meets your quality criteria,” says Jain. 

Align with life-stage changes 

Doshi advises immediate rebalancing if a life event or goal change renders the existing asset allocation unsuitable. Income changes alter investment capacity. “Higher income allows investors to increase their SIP contributions or invest larger lump sums,” says Feroze Azeez, joint chief executive officer, Anand Rathi Wealth. 

However, higher income alone should not dictate risk-taking. “Investors should go through a formal risk-profiling exercise before changing their asset allocation,” says Abhishek Kumar, Securities and Exchange Board of India (Sebi)-registered investment adviser and founder, SahajMoney.com. 

If income declined during the past year, Kumar suggests allocating more to liquid, low-risk assets and strengthening the emergency fund. 

Investors must also factor in their reaction to volatility over the past year. “Those who lost sleep or felt pressured to sell during market declines should move to a more conservative allocation, despite a long horizon,” says Kumar. 

Age influences asset allocation by affecting the investment time available. “Younger and middle-aged investors with long-term goals, such as retirement 15 to 20 years away, can maintain an 80:20 equity-to-debt mix,” says Azeez. 

Investors who have moved into their late 40s and 50s have greater responsibilities and shorter horizons. “Allocations should move towards a more balanced mix to protect accumulated wealth while allowing for moderate growth,” says Azeez. 

Risk appetite, shaped by individual experience, also plays a decisive role. “The conventional ‘100 minus your age’ rule should not be used as an asset-allocation strategy,” says Kumar. 

If a major goal is two to three years away, start reducing equity exposure. “This helps lock in gains and protects the portfolio from short-term market corrections, while allowing time to plan exits and optimise tax outcomes,” says Azeez. 

 

The writer is a Mumbai-based independent journalist