Investing Strategy: How to smartly allocate your assets in 2023 | The Financial Express

Investing strategy: How to smartly allocate your assets in 2023

Smart asset allocation strategy for 2023: With the present rate of increase trajectory and fears of a worldwide recession, 2023 will undoubtedly be a significant year for your investment portfolio.

investing strategy
Here's a smart asset allocation strategy for investors in 2023. Representational image

By Amit Shah

Asset allocation is a technique where one invests in several asset classes while balancing risk and returns. Diversification across asset types can significantly decrease risk while generating higher long-term returns. Chronological price fluctuations of several asset types, such as equities, fixed-income securities, credit, and gold, reveal a negative or minimal association. Financial advisors believe the appropriate asset allocation strategy is crucial in attaining financial goals.

With the present rate of increase trajectory and fears of a worldwide recession, 2023 will undoubtedly be a significant year for your investment portfolio. With signs of a global slowdown intensifying, it is a good moment for investors to consider asset allocation strategies to optimise returns on investment in an unstable financial market marked by high-interest rates and low investor confidence.

Why have a smart asset allocation strategy for 2023?

Two factors determine one’s portfolio allocation: 1) their investing goals and personal circumstances, and 2) the current market environment. Smart asset allocation strategies are predicted to influence your portfolio in 2023 significantly. These variables have an immediate influence on your portfolio. You may easily adjust the proportion of your asset allocation while evaluating your investing goals.

Also Read: Start your investment journey with this ever-green strategy in 2023

Your present portfolio asset allocation may need to align with the economic and financial trends anticipated for 2023. As a result, you must implement an asset allocation strategy that will provide you with predictable returns while mitigating downside risk.

Strategy for Asset allocation 

There aren’t any strict guidelines for how an individual should invest in asset allocation. Among the most popular top mutual fund asset allocation strategies used to impact investing decisions are as follows:

  • Asset allocation for life cycle funds

This method, also referred to as target date, seeks to optimise an investor’s returns on investment (ROI) depending on characteristics such as age, investing goals, and risk profile. However, detractors argue that this structural portfolio system is challenging to manage because of standardisation difficulties.

  • Allocation of tactical assets

This strategy tackles the long-term issues resulting from a strategic asset allocation plan. As a result, this approach aims to maximise short-term investing techniques. This adaptability adds a commodity component to the investment portfolio, enabling investors to participate in economic situations favouring one asset class over another.

  • Asset allocation with insurance

This technique establishes a fundamental asset value under which the portfolio should not be decreased. If the portfolio ever falls, the investor is advised to take the required precautions, such as investing in risk-free assets such as treasury notes (T-bills). This technique is appropriate for those that are risk-averse. For instance, an investor seeking a minimal standard of living throughout retirement may find this technique perfect for their financial objectives.

Which allocation strategy to choose

Interest rates have increased and are expected to go up in the short term, and bond prices are low; this is a perfect moment to invest in medium-term funds. A well-balanced asset allocation that includes some debt will safeguard the downside. It would be best to verify that your portfolio’s asset allocation strategy matches the danger with risk-mitigation procedures in place.

Also Read: How stock market crash impacts Mutual Fund investors: Golden lessons from past

Domestic short-term debt and Indian equity often work well together. Given the macroeconomic prognosis of largely uncontrolled global inflation and its passthrough to India, a mix of short to medium-duration/accrual debt and Indian equities is advised.

The most straightforward strategy to safeguard your investment from adverse risk is assessing your present position and adjusting your asset allocation while maintaining your long-term goals.


  • The advantage of asset allocation is that it updates your financial strategy by considering your position and external market conditions. This benefit allows you to monitor the success of your assets and then alter them to stay on pace to meet your goals.
  • An asset allocation strategy balances the pros and drawbacks of each asset class, ensuring that an investor has the correct risk exposure and volatility protection. An excellent plan allows you to capitalise on the attractive characteristics of each asset type.

Asset allocation is critical to achieving the appropriate amount of risk and return. Consider your investing goals, risk tolerance, and investment horizon when developing your asset allocation plan. Investors should consult their financial advisers about their financial objectives, asset allocation models, and strategies and make informed judgments about what is best for their investing requirements.

(The author is Founder and CEO of Wylth. Views expressed above are personal)

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First published on: 26-02-2023 at 12:09 IST
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