Equities, gold, FDs: Where should you invest as global headwinds blow?

The year 2022 has, so far, disappointed investors. 

Be it equities, gold, cryptocurrencies or debt instruments, returns have been flat to negative this year. It was driven by fears that advanced economies may see a ‘hard landing’ because of a sharper-than-anticipated rate hike cycle; energy crisis in Europe and faltering economic growth in China.

Even for the remaining part of CY22, the investment outlook remains challenging with the Russia-Ukraine conflict intensifying, and the US-China locking horns over Taiwan.

So, should investors take risk at the moment and invest their surplus money in any asset class? Or is it time to stay on the side lines, and let the dust settle?

Analysts suggest the time is right to start investing in equities in a calibrated manner.

G Chokkalingam, founder and chief investment officer, Equinomics Research says investors shouldn’t panic. Fall in oil prices to support economy. His strategy: 40-50% in equities, 30% in fixed income securities, 20% in gold or real estate. Equities (mid-and small-caps) should deliver 15–25% return over the next one year. 

While analysts do caution that Indian equities will not fly against the wind, they expect them to outperform their global peers.

Across various asset classes, analysts see equities giving up to 25% returns, one year from now on. 

Fixed deposits and government bonds, meanwhile, may generate around 6-7% returns, while gold may remain flat.

Bitcoin is expected to remain volatile with one-year return expectation ranging from -3% to 34%.

“Investors can turn ‘overweight’ on equities from ‘neutral’ in a calibrated manner. They may invest across domestic growth-oriented ideas; steady compounders; and contemporary portfolio ideas via mutual funds, and PMS/AIF strategies,” says Arpita Vinay, Managing Director and Co-head, Centrum Wealth

“Investors can invest in passive roll down funds and ETFs in the mark-to-market portfolio, while high-quality fixed deposits, select credit funds, and select market-linked debentures can be looked at on the non-MTM side,” says Vinay of Centrum Wealth.

On Wednesday, the Reserve Bank of India will commence its three-day monetary policy meeting.

This, along with other globe cues and the expiry of F&O contracts for the September series on Thursday, is likely to keep the markets choppy and impact trading sentiment today.