Debt as a buffer in bear markets
Historically, allocating more to debt has helped cushion portfolios during market declines, though it can cap long-term gains. FundsIndia Research’s data highlights how investors can balance volatility with potential returns when deciding the equity-debt mix.
- Higher debt exposure can reduce drawdowns in downturns
- But it may limit upside and long-run returns
- The takeaway is to align the mix with risk tolerance, time horizon, and goals
In practice, gradual adjustments to debt levels as circumstances change can help investors tailor risk and return to their needs, rather than seeking a fixed target.
