Paper Title
Optimal Portfolio Construction Using Mutual Funds, Stocks, Gold and Silver: A Modern Portfolio Theory Approach
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Registration ID: IJNRD_322562
Published ID: IJNRD2603497
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Keywords
Modern Portfolio Theory, portfolio optimisation, mutual funds, gold, silver, efficient frontier, Sharpe ratio, mean-variance, BSE Sensex, MCX, Indian capital market
Abstract
Portfolio construction has long been a central concern in financial management, particularly as markets grow more volatile and investor expectations become increasingly complex. This paper attempts to apply Harry Markowitz's Modern Portfolio Theory (MPT) to an investment universe comprising equity mutual funds, large-cap stocks, small-cap stocks, gold, and silver, with a specific focus on the Indian financial market context. Using ten years of monthly return data drawn from the BSE Sensex, NSE Nifty 50, BSE Small-cap Index, and MCX commodity spot prices (2014–2024), three efficient portfolio archetypes are constructed: a minimum-variance portfolio, a maximum Sharpe ratio portfolio, and a balanced portfolio. The results indicate that equity mutual funds consistently form the dominant allocation across all efficient portfolios, while gold provides meaningful variance reduction owing to its persistently low-to-negative correlation with equity instruments (−0.08 to −0.13 across indices). The maximum Sharpe ratio portfolio achieves a Sharpe ratio of 0.81 with an annualised return of approximately 12.8%, outperforming both equity-only and metal-only benchmarks on a risk-adjusted basis. Out-of-sample rolling window tests spanning 2015–2024 confirm that these gains are not merely artefacts of in-sample optimisation. The findings carry practical relevance for retail investors in India who are increasingly seeking alternatives to pure equity exposure amid rising inflation and geopolitical uncertainty.
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How To Cite (APA)
Hariharen B S (March-2026). Optimal Portfolio Construction Using Mutual Funds, Stocks, Gold and Silver: A Modern Portfolio Theory Approach. INTERNATIONAL JOURNAL OF NOVEL RESEARCH AND DEVELOPMENT, 11(3), e777-e785. https://ijnrd.org/papers/IJNRD2603497.pdf
Issue
Volume 11 Issue 3, March-2026
Pages : e777-e785
Other Publication Details
Paper Reg. ID: IJNRD_322562
Published Paper Id: IJNRD2603497
Research Area: Other area not in list
Author Type: Indian Author
Country: Salem, TAMIL NADU, India
Published Paper PDF: https://ijnrd.org/papers/IJNRD2603497.pdf
Published Paper URL: https://ijnrd.org/viewpaperforall?paper=IJNRD2603497
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