Why a 70:30 gold-silver mix works best for investors, explains Pratik Oswal

Investors are increasingly using index funds as long-term wealth-creation vehicles rather than for short tactical exposure, Oswal said

Passive investing in India is moving into the mainstream, and strategic gold–silver allocations can enhance portfolio returns, says Pratik Oswal, chief of passive business at Motilal Oswal AMC. In an email interview with Devanshu Singla, he explains how passive funds will play a bigger role in retirement planning, why mid-and smallcaps look attractive over the long-term, and how gold–silver allocation can improve risk-adjusted returns. Edited excerpts:

 

What is your overall outlook on passive investing in India over the next few years?

Passive investing in India is moving from early adoption to mainstream acceptance. Investors are increasingly valuing transparency, low costs, and the predictability of index-based outcomes. With broader product offerings across equity, factors, and commodities, passive solutions are becoming core building blocks in portfolios. Over the next 1–2 years, we expect steady, structural growth driven by both retail SIPs and institutional participation.

 

Will 2026 belong to passive-style or will active fund management fare better?

Both categories have a role, but passive strategies continue to gain market share. Passive investing offers clarity—investors know the exact strategy and risk they are signing up for. 2026 is likely to be a year where broad-market, factor, and asset-allocation index products are likely to see good traction.   

 

Are you seeing more long-term SIP-led flows into passive products, compared with short-term bets?

Yes, SIP-led participation in passive funds has strengthened considerably. Investors are increasingly using index funds as long-term wealth-creation vehicles rather than for short tactical exposure. This shift is driven by greater awareness and comfort with rules-based strategies. We expect SIP flows into passive products to remain a dominant driver of growth.

 

How do you explain the investment case for combining gold and silver in a portfolio? Why do you prefer a 70:30 gold-silver allocation?

Gold brings stability and acts as a hedge during global uncertainty, while silver adds an industrial-cycle kicker that enhances long-term return potential. Together, they create a balanced precious-metals exposure that performs across different macro regimes. A 70:30 mix leans on gold’s lower volatility while capturing silver’s upside during growth phases. Historically, this combination has shown better risk-adjusted outcomes than either metal in isolation.

 

Do you expect largecaps to continue outperforming mid and smallcaps?

Largecaps may continue to offer stability, but their earnings growth outlook is relatively moderate. Mid-and smallcaps, on the other hand, present more attractive long-term opportunities driven by stronger earnings trajectories and a structural expansion in the size and quality of companies within these segments. Importantly, the mid and small-cap universe today is far less risky than it was 5–10 years ago, thanks to better governance, scale, and institutional participation. We encourage investors to gradually increase their long-term allocations to mid-and smallcaps as part of a diversified portfolio.

 

What strategy would you suggest for a newbie investor in 2026 willing to take market risk?

Start with simplicity and diversification. A core allocation to broad-market indices, such as Nifty 500, provide efficient exposure from day one. A small allocation to factor indices like momentum or quality can further enhance diversification. Staying disciplined through SIPs and ignoring short-term noise is the most effective strategy for new investors.