Why we built India's first systematic multi-asset PMS with dynamic range

And why the numbers say open ranges aren't risky — they're the edge.

What is multi-asset PMS

A multi-asset PMS (Portfolio Management Service) invests systematically across equity and gold — rather than being locked into a single asset class. While most Indian PMS strategies are pure equity, Smart Core by Grey Sky Capital uses quantitative signals to dynamically allocate between Indian equities and gold, with ranges of 0-100% in either asset class. This SEBI-registered quant PMS is designed for HNIs and UHNIs seeking superior risk-adjusted returns with structural downside protection.

The Problem Nobody Talks About

Here's an uncomfortable truth about Indian equity investing:

The Nifty 50 has crashed 40% or more three times in the last 25 years. In 2008, it fell 65% — from 6,357 to 2,253. In March 2020, it nosedived 40% in weeks. Even the "mild" correction of late 2024 saw an 11% drawdown in just two months.

And yet, most Indian investors — including sophisticated HNIs evaluating PMS and AIF options — run portfolios that are 90-100% equity. No gold. No cash allocation framework. No systematic regime awareness.

The result? Extraordinary wealth creation over decades, punctuated by gut-wrenching drawdowns that force the worst possible decisions: panic selling at the bottom, then buying back too late.

We started Grey Sky Capital with one simple conviction: the biggest risk in investing isn't missing the upside. It's surviving the downside.

The Nifty 50 TRI has delivered ~14.5% CAGR over 10 years. That's solid. But the ride to get there included a 65% peak-to-trough fall, a 40% pandemic crash, and multiple 20%+ corrections. For an investor with ₹5 crore at stake, a 40% drawdown means watching ₹2 crore evaporate — on paper — in a matter of weeks. Most portfolios don't survive that psychologically, even if they survive it financially.

This is the problem we set out to solve.

We wanted to build a strategy with the best downside capture ratio in the market — across PMS and mutual fund strategies — while keeping upside capture comparable to top-quartile players. That's a hard constraint to optimise for. It forced us to think out of the box.

The Equity Story We Couldn't Ignore

Before we talk about gold and multi-asset, let's be clear about something: long-term wealth creation happens in equity markets. That's not an opinion — it's what every dataset across every market cycle in India confirms.

A well-constructed equity portfolio in India has compounded at rates that most global markets can only dream of. And unlike developed markets, actively managed portfolios in India still consistently beat the index. Why? Because the Indian market remains structurally inefficient — information asymmetry is high, mid-cap and small-cap coverage is thin, and momentum effects are stronger in less efficient segments. This isn't a temporary edge. It's a feature of where India sits on the market development curve.

So we started with a non-negotiable: equity must be the primary engine of wealth creation in our strategy. The majority of time, the portfolio should be in equities — riding momentum, compounding capital, capturing the India growth story.

But here's the question that most equity-centric managers don't ask: what happens during the other times?

The 2008 crash wiped 65% off the Nifty. An investor who entered at the peak in January 2008 didn't break even until late 2013 — nearly six years. The March 2020 crash was shorter but sharper — 40% in weeks. These aren't tail risks. They're recurring features of equity markets.

We needed something that didn't just sit idle during these periods — but actively worked in our favour. Recovery has to be faster from drawdown periods.

The Gold Signal That Completed the Picture

Research consistently shows that gold and Nifty have a weak-to-negative correlation. A 15-year study (2008–2023) found a weak inverse correlation between gold futures and Nifty 50 returns, with gold offering stability precisely during periods of economic uncertainty. Multiple studies confirm that in normal market conditions, gold prices tend to move inversely to equity — and during crisis periods like 2008 and 2020, gold actively rallied while equities collapsed.

This isn't just diversification. This is crisis alpha — gold doesn't just not fall with equities, it often rises when equities are at their worst.

And the market is now waking up to this reality.

In January 2026, Gold ETFs attracted ₹24,040 crore in net inflows — surpassing equity mutual fund inflows of ₹24,028 crore for the first time in history. More money flowed into gold ETFs in a single month than into the entire equity mutual fund category. Multi-asset allocation funds attracted ₹10,485 crore in January alone — the highest inflow in any hybrid mutual fund category. Gold ETF AUM has nearly tripled from ₹1 lakh crore in August 2025 to approximately ₹3 lakh crore by January 2026.

The structural gap we identified or zeroes in last year is now visible to everyone.

Quant Multi Asset Fund: The Validation

Before we go further, credit where it's due.

Quant Multi Asset Allocation Fund is, in our view, one of the most impressive mutual fund products in India. It validated the multi-asset thesis long before we launched.

The numbers speak for themselves (as of 9th Feb 2026, Direct Plan):

Read those numbers again. Over 5 years, Quant Multi Asset more than doubled the Nifty 50 TRI's returns. Over 10 years — across multiple market cycles, crashes, and recoveries — it delivered nearly 5% annual outperformance.

This isn't a fleeting edge. This is structural alpha from multi-asset allocation done right.

What Quant does well: it invests across equity, debt, and commodities (primarily gold), with a mandate to hold at least 10% in each asset class. The fund's equity allocation typically runs 54-61%, with significant gold and commodity exposure providing the diversification benefit that shows up in those returns.

We deeply respect what Quant has built. Their track record is genuine validation that multi-asset works in India. But we asked ourselves: can we take this further?

Don't Diversify. Concentrate — With Conviction.

There's a famous piece of conventional wisdom in investing: "Don't put all your eggs in one basket."

We tend to disagree and more aligned to Stanley Druckenmiller's philosophy — the man who ran George Soros's Quantum Fund and delivered 30% annualised returns over three decades — said it best: "The way to build long-term returns is through preservation of capital and home runs. When you have tremendous conviction on a trade, you have to go for the jugular."

That philosophy shapes everything about Smart Core.

We don't believe in holding 60% equity, 20% gold, and 20% debt at all times because that's what "balanced" looks like. We believe in being 100% in equity when equity momentum is strong — because that's where the compounding happens. And being 100% in gold or cash when equity signals break down — because that's where the capital gets preserved.

The key word isn't diversification. It's conviction backed by a system.

When well-wishers expressed concerns about the possibility of 100% gold allocation, we went back to the data. The maximum drawdown from being fully allocated to gold has historically been significantly less than the drawdown from a diversified equity portfolio of 30-50 stocks. Gold's worst drawdowns are shallower, shorter, and recover faster than equity drawdowns.

This might seem counterintuitive. A "concentrated" gold position feels riskier than a "diversified" 50-stock equity portfolio. But the data says otherwise. We let data speak — not what people may think or say.

And when the system says be in equity? We're fully in equity. Because the India story is real, the compounding is real, and active management in this market works. We don't hedge that conviction away with arbitrary fixed allocations.

Put all your eggs in one basket. Then watch that basket very, very closely — with a system that never blinks.

Three Pillars: How Smart Core Actually Works

Our strategy stands on three pillars. Every investment decision, every allocation shift, every entry and exit traces back to these:

Pillar 1: Systematic (Quant)

Every allocation decision — how much in equity, how much in gold, when to raise cash — is driven by quantitative signals. No discretion. No gut calls. No committee meetings.

Our conviction comes from data science principles. This is critically important for any macro strategy. Subjective calls on asset allocation — "I think gold will rally" or "equities look expensive" — are opinions. A systematic framework that scores, ranks, and allocates based on momentum signals across asset classes — that's quantitative investing. That's what we mean when we say QUANT.

The system identifies regime changes — the transition from bull to bear, from trending to range-bound — and reallocates accordingly. When equity momentum is strong, the portfolio reflects that. When gold momentum dominates, it shifts. The system gives us the conviction to act decisively, not hedge indecisively. Read more about our views on quant here.

Pillar 2: Dynamic Allocation (No Fixed Ranges)

Most multi-asset funds operate within rigid bands — 65% equity, 15% debt, 20% commodities. That's a regulatory or structural constraint, not an investment choice.

We have no such constraint. Our allocation ranges are 0-100% for equity and gold. In a full equity bull run, we ride it completely. In a crisis, we can hold 100% gold or cash. This flexibility isn't a bug — it's the central design feature.

The open ranges that look risky on paper deliver better returns per unit of risk in reality. Our backtested Sharpe ratio of 1.1 ( 4x of Nifty) and Sortino of 1.2 don't come from taking more risk — they come from taking smarter risk. If you can course-correct when wrong and stay the course when right — that's where market-beating alpha comes from.

Pillar 3: Multi-Asset

Equity for wealth creation. Gold for capital preservation. Cash for optionality.

Today, Smart Core's non-equity allocation is primarily in gold — because gold is a deep, liquid market with efficient instruments (ETFs) to express our signals at scale. But the framework is asset-class agnostic. We are open to including instruments that improve overall risk-return metrics and are liquid enough to invest at our target AUM — US equities (within regulatory limits) and REITs/InvITs (still nascent in India with limited liquidity for institutional scale) are on our radar.

The framework evolves. The three pillars don't.

The Numbers Behind the Conviction

Our 10.5-year backtested track record across two complete bull-bear cycles:

Downside Capture: 48% — For every ₹1 the benchmark loses, our strategy loses roughly 48 paise. Among the best downside capture ratios across PMS and mutual fund strategies in India.

Upside Capture: Comparable to top-quartile equity strategies — The system doesn't sacrifice upside to achieve this protection. It rides equity momentum fully during bull regimes.

Sharpe Ratio: 1.1 — Returns per unit of total risk, significantly above market benchmarks.

Beta: 0.7–0.8 — Structurally lower market sensitivity. We win by losing less.

5-Year CAGR: 53% vs Nifty's 13.2%. 7-Year CAGR: 41.6% vs Nifty's 12.9%.

All these numbers can be seen in our product whitepaper

Live Performance (January 2026): 20.05% TWRR while Nifty fell 3%. On completely unseen data. Was there luck? Absolutely. But the system was positioned correctly because the signals were clear.

Why Multi-Asset? Why Now? And Why Always.

We expect demand for multi-asset funds to spike in the near term — as it already has, with January's record-breaking inflows. And we expect it to moderate when gold returns normalise and equity markets recover.

That cyclicality is exactly the problem with discretionary multi-asset investing. Money flows in after gold has rallied and flows out when it hasn't.

Smart Core isn't a gold trade. It's a framework.

Our strategy will always be at the core of Grey Sky Capital's universe. New generation of models will come. New assets will be incorporated in this one. New satellite strategies will be added. But the systematic framework for tactically shifting across asset classes — while spending the majority of time invested in equity — is the most robust approach to long-term wealth creation we've found in the data.

Equity creates wealth. Gold preserves it during the storms. And a system that knows when to shift between the two — without emotion, without committee meetings, without playing to the gallery — that's the edge.

The process is the edge. The data is the conviction. And the output — whether it's Month 1's 20% or a future month's -5% — is the byproduct of trusting both.

Month 1: A story for the ages. A lesson in trusting the process. January ' 26 was our first month as a SEBI-registered PMS. Our first month as an aspiring top-decile asset manager in India. It began with a silent prayer. Then excitement. Then disbelief. Then sheer ridiculousness.The strategy delivered the best monthly return in our entire history of backtesting. We won't pretend this wasn't luck—starting with a month like this is a gift, and we accept it with open hands and humility.

Factsheet/ one pager is here Please do not come expecting these returns in one month. Come for the product/framework and you will not be disappointed.

Frequently Asked Questions

What is a multi-asset PMS? A multi-asset Portfolio Management Service invests across multiple asset classes — typically equities, gold, and cash — rather than being restricted to equities alone. Unlike traditional PMS strategies that are 90-100% equity, a multi-asset PMS can tactically shift allocations based on market conditions, improving risk-adjusted returns and reducing drawdowns.

How is Smart Core different from a multi-asset mutual fund? Most multi-asset mutual funds operate within fixed regulatory bands (e.g., minimum 10% in each asset class). Smart Core has no such constraint — allocation can range from 0-100% in equity or gold, driven entirely by quantitative signals. This flexibility allows full conviction in whichever asset class momentum favours.

Why include gold in a PMS portfolio? Gold has a weak-to-negative correlation with Indian equities. During the 2008 crash (Nifty -65%) and the 2020 crash (Nifty -40%), gold rallied. This isn't just diversification — it's crisis alpha. Gold actively gains value when equity portfolios are under maximum stress.

What is the minimum investment in Grey Sky Capital's PMS? The minimum investment is ₹50 lakhs, as per SEBI regulations for Portfolio Management Services in India. Grey Sky Capital is SEBI-registered (INP000009694).x

Can a quant system really time asset allocation between equity and gold? Smart Core doesn't attempt to "time" the market through predictions. It uses systematic signals to identify regime changes — transitions from bull to bear markets — and reallocates accordingly. The backtested track record across 10.5 years and two complete bull-bear cycles shows a downside capture ratio of 48% while maintaining top-quartile upside capture.

How does a multi-asset PMS fee structure work? Multi-asset PMS providers typically charge a management fee (1-2% annually) and may include a performance fee on returns above a hurdle rate. Because multi-asset strategies involve active rebalancing between equity and gold, understanding the net impact of fees on returns is important. Use our interactive Fee Simulator to see exactly how different fee structures affect your portfolio over time.

How can I check the performance of a multi-asset PMS? SEBI requires all registered portfolio managers to report performance data to the Association of Portfolio Managers in India (APMI). You can verify any PMS strategy's reported returns on the APMI performance dashboard. For a simple ranking across PMS strategies— use our PMS Monitor, which tracks performance data across 1200+ PMS strategies in India. It gives Decile ranking across time frames and easy to use and navigate.

Disclaimer: Investment in securities market are subject to market risks. Read all related documents carefully before investing. Past performance — whether backtested or live — is not indicative of future returns. The performance data provided herein is not verified by SEBI. Registration granted by SEBI does not guarantee performance of the portfolio manager or provide any assurance of returns to investors. The comparison with mutual fund schemes is for educational purposes only and does not constitute a recommendation against any product.

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