The first half of the year is coming to an end and it?s time to review the investment strategy and the portfolio that we embarked upon in the beginning of the year. Review is the mechanism to check the progress and also to effect course correction, if required, in the interim, in line with the investment strategy and goals. How do we go about going this exercise is important, especially today, when the investment climate across the globe does not inspire confidence.

Typically, this is the best time to review and plant the seeds.

Recollect: On January 2, 2012, the Sensex was at 15,517 points. On June 1, the Sensex is at 15,965: an annualised return of close to 7% for five month. In the interim period, the Sensex reached a high of 18,523 in February this year. Post-Budget, the equity market has only flattered to deceive. The doomsayers have gone to predict the worse. But do recollect, the seeds of wealth were sown during the periods of great pessimism. Remember the years 1991, 2001, 2005 and 2008 (short-term rally).

In the investment strategy, it is suggested to have an asset allocation, with a bias and overweight towards fixed income instruments. This strategy has actually delivered annualised double-digit return in the five-month period.

The RBI held on to its policy of not lowering the interest rates for the first quarter of the year. But the continuously depressing growth figures and rising inflation made the central bank act in the April. It lowered the interest rates by 50 basis points. This was a surprise. But, then, this was one of the pleasant ones. The easy liquidity that was in the system post the 2008 global crisis and the successful NREGA policy of the government, which has today empowered the rural community, also contributed in the RBI move.

With the integration of the world economy, if Spain sneezes, India also catches a flu. No one is spared today. With the dollar regaining the confidence of the global investors, the rupee has been in a free -fall. It has lost more than 25% of its value from April 2011 and more than 12% since the beginning of this year. This has definitely made expatriate Indians remit more to India, which is welcome.

Recommended strategy: We continue with our recommendation to be overweight on debt products, this time with a horizon of 15-18 months. Having 20-30% investable surplus in liquid mutual funds or short-term funds is also recommended. This will allow you to also undertake tactical asset allocation (which is temporarily reallocation of your investments in debt to equity funds by additional 10-15%.)

At the same time, goal-based investing is what will see you sail through tough times. Your strategic asset allocation (which is predefined asset allocation) will ensure that you do not lose sight of your goal. Your emotional strength is being tested in the current investment scenario.

In the Asset Allocation strategy, I would not recommend to allocate more than 10-15% allocation to gold. Regular systematic investment (SIP)/ETF should be the approach. With rising inflation, what we looked at was nominal returns. The real returns, which is the return post the inflation, is what needs to be considered. Over the longer run, with little or no exposure to equity would by its very design reduce your initial capital as inflation would eat into it. So, do not ignore investments in equity funds, either through a mutual fund or directly. In case of a 10-15-year investment horizon, having a 50% asset allocation today can be considered for the strong willed. This will provide the alpha returns in your portfolio. Do revisit the later part of 2009 and early part of 2010, when the equity market galloped .So, do not shy away from having an equity exposure.

At 5% growth, rising inflation, soaring petrol prices and declining currency, everyone wants safe havens. There is nothing like a safe haven. Have an asset allocation, do your periodic review, control your emotions and invest. Not taking a risk is also a risk.

The writer is founder & managing partner of Zeus WealthWays LLP