Should you keep a 100% equity portfolio? Here’s what 20 years of data reveals about risk-adjusted returns
If you are looking only at returns, allocating 100% to equity may appear to be the clear winner. But returns tell only one part of the story. The amount of volatility taken to generate those returns also matters.
Data from UTI Mutual Fund shows that while the 100% equity portfolio delivered higher returns, it also carried greater risk. Here’s how adding debt or fixed income to the portfolio changes the equation.
Which portfolio leads in returns?
The comparison uses the Nifty 100 TRI to represent equity and the CRISIL Short Term Bond Fund Index to represent fixed income or debt. The 50:50 portfolio assumes an equal allocation to the two.
| Period/ CAGR | 100% Equity | 50:50 Balanced | 100% Fixed Income |
| 1 Year | -3.6% | 1.1% | 5.8% |
| 3 Years | 10.5% | 9.2% | 7.3% |
| 5 Years | 10.5% | 8.7% | 6.4% |
| 10 Years | 12.8% | 10.6% | 7.0% |
| 20 Years | 12.5% | 10.9% | 7.2% |
*Source: UTI Balanced Hybrid Fund presentation, Data as on 30 June 2026, Equity denotes Nifty 100 TRI, Fixed Income denotes CRISIL Short Term Bond Fund Index. 50E:50FI denotes 50% allocation to Nifty 100 TRI Index and 50% Allocation to CRISIL Short Term Bond Fund Index.
Over longer periods, equity had the edge in absolute returns.
For example, ₹1 lakh invested 20 years ago in equity would have grown to around ₹10.5 lakh today. The same amount would have grown to around ₹7.9 lakh in the 50:50 portfolio and ₹4 lakh in the all-debt or fixed income portfolio.
The short-term picture was different. Over one year, the equity portfolio was down by 3.6%, while the 50:50 portfolio gained 1.1% and fixed income returned 5.8%.
Also, the 50:50 portfolio outperformed fixed income across all periods except in the last 1 year.
What about the risk?
Standard deviation measures how widely returns have fluctuated around their average. A higher standard deviation indicates greater volatility, while a lower figure indicates more stable return patterns.
| Period/ SD | 100% Equity | 50:50 Balanced | 100% Fixed Income |
| 1 Year | 13.5% | 7.0% | 1.3% |
| 3 Years | 13.6% | 7.4% | 5.5% |
| 5 Years | 14.1% | 7.5% | 4.3% |
| 10 Years | 14.2% | 8.3% | 3.8% |
| 20 Years | 20.9% | 10.3% | 3.2% |
*Source: UTI Balanced Hybrid Fund presentation, Data as on 30 June 2026
The equity portfolio consistently recorded higher volatility than the other two portfolios.
Over 20 years, equity had a standard deviation of 20.9%, compared with 10.3% for the 50:50 portfolio and just 3.2% for fixed income.
Which portfolio scores better on risk-adjusted returns?
Risk-adjusted return puts returns and volatility together. In this analysis, it is calculated as:
- Risk-adjusted return = CAGR ÷ Annualised standard deviation
A higher figure means the portfolio generated more return relative to the volatility recorded.
| Period | 100% Equity | 50:50 Balanced | 100% Fixed Income |
| 1 Year | -0.27 | 0.2 | 4.5 |
| 3 Years | 0.77 | 1.2 | 1.3 |
| 5 Years | 0.75 | 1.2 | 1.5 |
| 10 Years | 0.79 | 1.3 | 1.9 |
| 20 Years | 0.60 | 1.0 | 2.2 |
*Source: UTI Balanced Hybrid Fund presentation, Data as on 30 June 2026, Risk-adjusted return = CAGR ÷ Annualised standard deviation
The data show that the 50:50 and debt portfolios gave higher risk-adjusted returns than the 100% equity portfolio across every period.
This does not mean they generated higher absolute returns. Rather, their lower volatility meant that the return generated was higher relative to the risk.
For long-term investors, this comparison highlights why looking at returns alone can give an incomplete picture of performance. The same return can come with very different levels of volatility, and risk-adjusted measures help bring that difference into view.
Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.
