Celebrate Diwali 2025: As Diwali approaches, it’s not just homes that need a festive glow-up — your portfolio could use one too. The season of prosperity is the perfect time to rethink your financial goals and explore new ways to manage risk. Diversifying across multiple assets helps protect your wealth and ensures your money keeps working hard, even when markets fluctuate.
“At its core, diversification is an acknowledgement that we don’t know which asset class will outperform in the future,” says Sachin Jain, Managing Partner at Scripbox. “It’s about being prepared for any market scenario.”
This festive season, look beyond traditional investments like FDs and stocks. Here are seven alternative ways to diversify your portfolio and build long-term resilience.
1. Income Arbitrage Funds
Fixed deposits have long been a conservative favorite, but their fully taxable returns can limit net gains. Income arbitrage funds blend debt and equity arbitrage opportunities, offering better post-tax returns.
“Held for over two years, these funds enjoy long-term capital gains tax of 12.5% — delivering FD-like returns of around 7–7.5% with better tax efficiency,” explains Jain.
They’re ideal for investors seeking stability and liquidity with a two-year horizon.
2. Equity Savings Funds
These funds combine equity (up to 35%), debt, and arbitrage components, creating a balanced mix of growth and stability. Since the total equity exposure (including arbitrage) exceeds 65%, they qualify for equity taxation benefits.
“These are great for a two- to three-year horizon if you want to beat inflation while keeping volatility low,” says Jain.
3. Balanced Advantage or Dynamic Asset Allocation Funds
BAFs and DAAFs automatically adjust their equity and debt exposure based on market conditions. They reduce equity in overheated markets and increase it during dips — all within the fund, so you avoid tax on every transaction.
“Rebalancing happens internally, allowing investors to capture market opportunities while staying diversified,” Jain adds.
4. Gold and Silver ETFs
Precious metals remain timeless hedges against inflation and uncertainty. While gold offers safety, silver adds an extra edge through industrial demand.
“Silver provides the kick in the combo,” says Jain. Long-term investors can allocate 5–10% of their portfolio to these metals, either directly or through multi-asset funds.
Ajay Lakhotia, Founder & CEO of StockGro, adds: “Gold ETFs bring portfolio stability, while silver ETFs offer inflation-hedged growth exposure.”
5. Global Exposure via Feeder Funds and GIFT City
International diversification is now simpler than ever. Feeder funds let investors access global equities in markets like the US and Asia, while GIFT City enables overseas investing within India’s Liberalised Remittance Scheme (LRS).
“This approach not only adds diversification but also manages currency risk — especially for families planning global education or travel expenses,” says Jain.
6. REITs and InvITs
Want exposure to real estate or infrastructure without the hassle of ownership? Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) make that possible.
“REITs offer regular income and portfolio diversification, while InvITs provide steady cash flows linked to India’s infrastructure growth,” says Lakhotia.
With India pushing for asset monetisation and infra development, these products are gaining traction.
7. Thematic, Sectoral, and Hybrid ETFs
These professionally managed products mix equity, debt, gold, and cash, providing built-in diversification. They also let investors tap into high-growth themes like AI, EVs, clean energy, or defence.
“Hybrid mutual funds and sectoral ETFs help align investments with India’s economic trends while effectively spreading risk,” notes Lakhotia.
The Bottom Line
This Diwali, think beyond the usual. True diversification means blending stability, growth, and tax efficiency — not chasing the hottest trend.
As Jain sums up, “Diversification isn’t about chasing higher returns; it’s about managing risk. Spreading investments wisely ensures long-term stability.”
With the right mix of alternatives — from arbitrage and hybrid funds to REITs, commodities, and global equities — your portfolio can shine brighter this festive season.
Disclaimer: The views and opinions shared by experts are their own. Always consult a qualified financial advisor before making investment decisions.
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