As global markets remain rattled by war-driven volatility, rising crude oil prices and uncertainty over interest rates, Zerodha co-founder Nithin Kamath has once again returned to a theme he has pushed for years: for most investors, diversification remains the most dependable way to generate long-term returns and reduce risk.
In a post shared on social media platform X on Thursday, April 2, Kamath used what looked like a straightforward portfolio performance chart from Zerodha’s Console platform to make a much broader point — that both investing and the tools investors rely on are far more complex than they appear on the surface.
The chart, he suggested, may seem ordinary to users, but building such investor-facing analytics accurately at scale is anything but simple. Every portfolio is shaped by multiple moving parts — cash inflows and outflows, dividends, bonuses, stock splits, partial exits, transfers and other variables — all of which can skew performance data if not handled with precision.
“The sheer number of edge-cases took enormous engineering effort to get right,” Kamath said.
He further stated that a steady and diversified portfolio remained the best way to outperform over time, and pointed to an internal example of a colleague whose portfolio had consistently beaten benchmark indices through a balanced approach rather than concentrated bets.
Equities under pressure
His latest comments come at a time when investor nerves are stretched across asset classes. Equities have come under pressure globally since the escalation of the US-Israel-Iran conflict, with markets reacting sharply to the spike in crude oil prices and the inflation risks that have followed. Indian benchmark index Nifty 50 has lost over 10% since the US-Iran war began.
The pressure has not been limited to stocks. Gold, usually viewed as a safe haven during periods of geopolitical and economic uncertainty, has also failed to sustain momentum. At the same time, bond yields have moved higher as markets increasingly fear that central banks could be forced to keep monetary policy tighter for longer if energy prices remain elevated.
That has left investors in a difficult spot. Risk assets are volatile, defensive assets are not offering complete comfort, and short-term positioning has become harder as global headlines keep changing market direction.
It is exactly in such conditions, Kamath has argued, that diversification proves its worth.
In an earlier post on March 30, he had made a similar point in even more direct terms: “No one can predict which asset class will do well. For 99% of people, the best thing to do is diversify and stay invested during the good times and the bad.”
That message has found increasing resonance among market veterans and wealth advisers, especially during periods when investors are tempted to chase momentum in a single sector, theme or asset class. A diversified portfolio is built not around prediction, but around resilience. It spreads exposure across sectors, themes and sometimes even asset classes, helping investors participate in upside while cushioning the blow during periods of sharp correction.
That does not mean diversification eliminates volatility. But in a world where stocks, bonds, commodities and currencies can all react sharply to the same geopolitical or macroeconomic trigger, it can help investors avoid being overexposed to one wrong call.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
