New Delhi, Aug. 16 -- If you are looking only at returns, allocating 100% to equity may appear to be the clear winner. But returns tell only one part of the story. The amount of volatility taken to generate those returns also matters.

Data from UTI Mutual Fund shows that while the 100% equity portfolio delivered higher returns, it also carried greater risk. Here's how adding debt or fixed income to the portfolio changes the equation.

The comparison uses the Nifty 100 TRI to represent equity and the CRISIL Short Term Bond Fund Index to represent fixed income or debt. The 50:50 portfolio assumes an equal allocation to the two.

Over longer periods, equity had the edge in absolute returns.

For example, Rs.1 lakh invested 20 years ago in e...