Gold, Momentum, and All Weather
Building Portfolios That Survive Any Regime: Why No Single Asset Class Wins All the Time
March 2026 | Qode Advisors LLP
The Problem With Equity-Only Thinking
Most Indian investors run portfolios that are almost entirely equities. It makes sense in bull markets. The Nifty 50 delivered roughly 10.6% returns in 2025, and over the longer term, equity has compounded at around 11-12% annually (PaytmMoney Market Review). The problem is not returns. It is what happens when the cycle turns.
During the COVID-19 crash of March 2020, the Nifty dropped 38% in weeks. In the 2008 global financial crisis, the index fell roughly 35% from its pre-crisis levels. These are not obscure historical footnotes. They are a recurring feature of equity markets, and they destroy compounding for years
Here is the issue most investors underestimate: diversification works differently in calm markets versus stressed markets. Asset correlations shift during crises. The stocks, sectors, and funds you thought were "diversified" start moving in lockstep precisely when you need them not to. A portfolio that tests well in backtests can fall apart in real drawdowns if it has not been stress-tested across regimes.
Gold: The Asset That Runs Counter to Panic
Gold's value in a portfolio is not about chasing returns. It is about what it does when everything else breaks. Research using DCC-GARCH models has shown that gold exhibited a negative correlation with Indian equities specifically during the 2008 financial crisis, the 2020 COVID crash, and the 2022 Russia-Ukraine conflict (Asian Online Journals, 2024).
During the 2008 crisis, while the Nifty fell 35%, gold ETFs in India surged 69%. In 2020, when the Nifty dropped 38%, gold delivered over 25% returns for the year. This negative correlation during crashes is what makes gold genuinely useful in a portfolio. The World Gold Council describes this as gold being a "crisis alpha" asset: its correlation to equities tends to turn negative right when market stress peaks (World Gold Council).
The market is catching on. Gold and silver ETF AUM in India crossed Rs 3 lakh crore in January 2026, nearly tripling in five months from Rs 1 lakh crore in August 2025. Gold ETF folios surged past 1.14 crore, and net inflows in January alone hit Rs 24,040 crore, a 106% jump over December (Press Post India; Upstox/AMFI Data). Gold ETFs also benefit from a tax-efficient structure: long-term capital gains above Rs 1.25 lakh are taxed at just 12.5% after one year, preserving more of gross returns compared to physical gold.
Momentum and Low Volatility: The Equity Factors That Persist
Gold handles the downside. But you still need equity exposure for long-term wealth creation. The question is: which kind of equity exposure?
Two factors have shown persistent outperformance in India over long horizons: momentum and low volatility.
The Nifty 200 Momentum 30 Index selects 30 stocks from the Nifty 200 based on normalised momentum scores, using 6-month and 12-month price returns adjusted for volatility. This captures trending markets effectively. Across rolling return periods, the index has outperformed the Nifty 50 consistently (NSE Indices Factsheet).
On the defensive end, the Nifty 100 Low Volatility 30 Index selects the 30 least volatile stocks from the Nifty 100. Over 15 years, it has delivered a CAGR of 15.2%, generating 320 basis points of alpha over the Nifty 50. It has outperformed in 10 out of 19 calendar years since 2006, and critically, showed lower drawdowns in 16 out of 19 of those years (Mirae Asset, Jan 2025).
The critical insight: momentum and low volatility are complementary, not competing. Momentum captures upside in trending markets. Low volatility protects during reversals and flat stretches. Gold kicks in during genuine crises when correlations spike across equity factors. No single factor wins all the time. That is exactly why combining them works.
The All Weather Logic: Systematic Allocation, Not Prediction
Building an all-weather portfolio is not about forecasting which regime comes next. Nobody consistently gets that right. It is about constructing a framework that dynamically shifts allocation between defensive and aggressive positioning based on quantitative signals, not gut feel.
At Qode, the All Weather Portfolio is built on this principle. The strategy combines momentum equities, low volatility equities, and gold ETFs in a systematic framework. The allocation is roughly 60% equities and 40% gold, with the equity sleeve split across momentum and low volatility factors (PMS Bazaar Interview, Rishabh Nahar).
What gold does to this portfolio is significant. It cuts through drawdowns and reduces overall volatility. When the Nifty corrected in late 2025, equities pulled back, but gold's strength meant the All Weather portfolio saw only a 1.5-2% drawdown even as gold itself briefly corrected 10-12% (PMS Bazaar Interview). The asset classes complement each other. When one leg weakens, the others absorb the impact.
The ETF-based implementation keeps costs low and adds tax efficiency. Unlike direct equity portfolios that churn positions and trigger frequent capital gains, an ETF wrapper allows rebalancing at the strategy level without creating taxable events at the individual security level. That tax drag difference compounds meaningfully over five and ten-year horizons.
Why This Matters Now
We are in an environment where no single narrative dominates cleanly. Interest rates are falling: the RBI cut the repo rate by 125 basis points to 5.25% in 2025 (Trading Economics). That favours equities. But geopolitical uncertainty, trade war risks, and currency volatility remain elevated, which favours gold. Domestic equity markets delivered reasonable but not exceptional returns in 2025, with FIIs pulling out Rs 1.52 lakh crore while domestic investors held the line through Rs 3.34 lakh crore in SIP contributions (PaytmMoney).
This is precisely the kind of environment where an all-weather approach outperforms concentrated bets. You do not need to predict whether the next 12 months favour gold or equities, momentum or defense. You build a framework that captures returns from multiple drivers and let the system rebalance as signals change.
Qode Angle: Systematic strategies recognise that no single asset class wins all the time. At Qode, the All Weather Portfolio is built on the principle that different factors and assets outperform in different regimes. Our quantitative framework dynamically shifts allocation based on market signals, not predictions. The goal is not to maximise returns in any single period but to deliver consistent, risk-adjusted compounding over the long term.
The Bottom Line
Traditional equity-only portfolios break during regime shifts. Gold provides genuine crisis protection through its negative correlation with equities under stress. Momentum captures trending markets while low volatility provides defensive ballast. No single asset or factor wins all the time, and any portfolio built around a single bet is fragile.
The investors who will compound wealth through the next decade will not be the ones who correctly guessed the best-performing asset class of 2026. They will be the ones who built frameworks designed to capture factor premia across cycles: systematically, without emotion, and grounded in data.
The question is whether your portfolio is built to perform regardless of which regime shows up next.
Disclaimer: This blog is for informational and educational purposes only and should not be construed as investment advice or a recommendation. Past performance is not indicative of future results. All investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making investment decisions. Qode Advisors LLP is a SEBI-registered Portfolio Management Service (PMS) provider. SEBI Registration No: INP000008914.
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