Gold is Stability, Fixed Income is the Underdog: Kotak’s Lakshmi Iyer on Navigating Market Volatility

Navigating 2025: A Market of Snakes and Ladders

The Indian stock market has been experiencing significant volatility, with Nifty swinging between 22,000 and 23,000, leaving investors on edge. Against this backdrop, Lakshmi Iyer, CEO – Investment and Strategy at Kotak Alternate Asset Managers, shared her insights at Moneycontrol’s Global Wealth Summit, describing 2025 as the “Year of Snakes and Ladders.”

According to Iyer, the market will continue to test investors, much like the unpredictable ups and downs of the classic board game.

“Picture an investor climbing up to 98, convinced they are about to cross the finish line, only to slide all the way down to 15 or 18—forced to start again from scratch. That is the nature of this market; we cannot ignore its ups and downs,” she remarked.

In such a volatile investment landscape, she emphasized the need for portfolio diversification, urging investors not to shift entirely from one asset class to another based on short-term trends.

Gold as “Vishnu” and Fixed Income as “Cinderella”

Iyer used a compelling analogy to explain the role of different asset classes:

• Gold, which has been on a strong upward trend, is a wealth protector. She compared it to Lord Vishnu, signifying balance and stability in a portfolio.
• Fixed income, often overlooked, plays the role of Cinderella—an underdog that gains importance when markets turn volatile and delivers steady returns.

“Gold has been the ‘Student of the Year’ and might even get a sequel this year and the next. But can you rely only on gold? Absolutely not,” Iyer remarked.

While gold has been a strong performer, she emphasized that fixed income assets—such as bonds and debt mutual funds—are equally crucial for hedging risks and ensuring long-term stability.

“Fixed income is that Cinderella story—the underdog that quietly outshines even gold, proving its worth when you least expect it,” she added.

Equities: The Growth Driver, But Not the Only Option

Iyer acknowledged that equities remain the best long-term wealth creation tool, but a diversified approach is necessary to manage risk.

“If the goal is to double ₹100 to ₹200, equities could be the ticket. However, in a market as unpredictable as this, portfolio diversification is key—allocating some weight to gold, fixed income, and alternative assets,” she advised.

She warned against recency bias, where investors get swayed by recent market movements and rush to exit or enter asset classes based on short-term sentiment.

“Right now, the sentiment leans towards shifting from one asset class to another. But just because our recency bias nudges us toward seemingly safer alternatives, it doesn’t mean we should exit one asset class completely,” she said.

A Bollywood Take on Market Volatility

In a lighthearted take, Iyer compared the current market situation to a Bollywood action-packed drama filled with unexpected twists.

“One moment, the gully boys are turning into ‘Jawans’, the next, the ‘Jawans’ morph into ‘3 Idiots’, and before you know it, there’s a ‘Deepseek’ moment where Nvidia whispers, ‘Koi Mil Gaya,'” she quipped, referencing popular Bollywood films and tech trends to illustrate the unpredictability of the market.

Highlights for Investors in 2025

• Market Uncertainty is Here to Stay: Expect fluctuations, similar to a “snakes and ladders” game.
• Diversification is Essential: Equities, gold, and fixed income should all have a place in a portfolio.
• Gold is a Hedge, Not a Growth Strategy: While gold has been a top performer, it should be used as a stabilizer, not as a sole investment.
• Fixed Income’s Hidden Potential: Fixed income assets offer steady returns and serve as a cushion during market downturns.
• Avoid Emotional Investing: Reacting impulsively to market movements can result in missed opportunities and increased risk.

Balancing Risk and Growth in an Unpredictable Market

As 2025 unfolds, the market remains a mix of uncertainty and opportunity. Lakshmi Iyer’s insights emphasize the importance of asset allocation, ensuring a balanced approach where equities drive growth, gold offers protection, and fixed income provides stability.

For investors, the key takeaway is to remain disciplined, diversified, and adaptable—ensuring that they can navigate the ups and downs with confidence in a market that continues to evolve.