How to calculate your portfolio allocation
Lakshmi is forty-one, works in Chennai, and writes things down. Two years ago she wrote down a mix she was comfortable with, funded it, and then did what most careful people do. She left it alone and kept investing every month. On a Sunday evening she finally added everything up in one place and found a portfolio she did not quite recognise. Nothing had gone wrong. No decision had been bad. The mix had simply drifted while she was busy. Drift is quiet. This is how she measured it, and what she did about the gap.
11 min read · Reviewed 2026-08-17
Nothing went wrong, and that was the problem
When Lakshmi started, the portfolio was about ₹11,00,000. She had chosen a split she could explain to herself: sixty per cent equity, thirty per cent debt-style holdings, ten per cent gold. That meant roughly ₹6,60,000, ₹3,30,000 and ₹1,10,000. She set up monthly instalments, checked in now and then, and mostly resisted the urge to keep changing things. By most measures she behaved well.
Two years later the equity portion had done much better than the rest. That sounds like good news. It is also a little uncomfortable, because it means a larger share of her money was now exposed to sharp falls. A portfolio that is left alone does not stay where you put it. Its shape follows whichever part is winning.
What made it hard to notice is that nothing ever flagged it. There was no bad month, no scary headline, no moment where a decision had to be made. Her monthly instalments kept going to the same schemes she had picked at the start. Each statement looked fine on its own. The only place the change existed was in a comparison she had never run.
Use today’s value, not what you paid
Allocation answers a question about today, so it needs today’s numbers. Add the current value of every holding in scope. Divide each category’s current value by that total. Multiply by a hundred. Purchase amounts answer a different question: how your past contributions were spread. That is useful history. It is the wrong tool for deciding what to do next.
The same maths works at any level you care about. You can calculate the share held by a single holding, an asset class, a geography, a currency, or one particular scheme you suspect has grown too large. The method does not change. Only the grouping does. Keep the valuation date and the reporting currency the same across every line, or the percentages will not describe any real portfolio.
- Category share % = category current value ÷ total current value × 100
- Every included category should sum to roughly 100%, allowing for rounding
- Use one valuation date and one reporting currency for the whole calculation
- Write down which holdings you excluded, and why, before you interpret anything
Lakshmi’s actual mix on that Sunday
Her total came to ₹18,40,000: ₹13,10,000 in equity holdings, ₹4,05,000 in debt-style holdings, and ₹1,25,000 in gold. Rounded values, a single valuation date, and no allowance for exit loads, brokerage or taxes. None of those show up in an allocation percentage, but all of them show up if you act on one.
Run the division and the picture is plain. Equity is about 71.2 per cent, debt-style holdings about 22.0 per cent, gold about 6.8 per cent. Against the sixty-thirty-ten she had written down, equity had drifted more than eleven percentage points higher. Both of the steadier portions had shrunk in share while growing in rupees. Every one of those holdings had gone up. The mix still moved, because allocation is about proportions, not direction.
She said the number out loud. It felt different from the idea of “markets did well.” Seventy-one per cent equity meant a heavy fall would take a much larger bite out of the total than the plan she had agreed with herself two years earlier.
Decide what belongs in the denominator
Before reading a percentage, name the pot it describes. Lakshmi’s 71 per cent was for her investable portfolio. It excluded the flat she lives in and the emergency money in a sweep account. Both exclusions are reasonable. Both also make the equity share look higher than a whole-balance-sheet view would.
If she folds in ₹3,60,000 of emergency cash and short deposits, the total becomes ₹22,00,000 and the same ₹13,10,000 of equity falls to about 59.5 per cent of the pot. Nothing was bought or sold. Only the definition changed. That is why a percentage without a stated scope is closer to a guess than a measurement.
Drift is not the same as daily noise
Drift is what Lakshmi found: a slow change in shape caused by one part growing faster than the others. Daily noise is the number moving because Monday happened. Mixing the two turns a useful measurement into a reason to check, and trade, too often. A portfolio checked every morning tends to get traded for reasons nobody can explain later.
A comparison against a target is only useful if the target still matches your goals, your time horizon, and the loss you could actually take without dropping the plan. If the target was never written down, the honest first step is writing it down. Do not rebalance towards a number you have just invented on a Sunday evening. Reviewing quarterly or half-yearly is usually enough to notice real drift and ignore the rest.
It also helps to ask what caused a shift before you respond to it. A category’s share can rise because its holdings gained, because you kept buying into it, or, for anything held abroad, because the exchange rate moved. Those three causes look the same on a pie chart and need different responses. So the number is worth one question before it becomes a decision.
Compare the current mix with your chosen range. Drift is a review signal, not an automatic trade.
What she did with an eleven-point gap
She did not sell anything that week, and that turned out to matter. Instead she redirected new monthly contributions towards the portions that had shrunk in share. That closes a gap slowly, without triggering exit loads or a tax event. At her contribution level, that alone moved the equity share down by a couple of percentage points over the following two quarters.
She also wrote a rule for the harder case. If any category drifts more than five percentage points from its target, and new contributions cannot close the gap within a couple of quarters, she will look at a deliberate switch. She will check exit loads, holding periods and tax implications before doing it. Nothing in this article is a recommendation for your portfolio. A suitable mix and any rebalancing rule depend on your own goals, obligations and capacity for loss. A material decision may be worth discussing with a qualified adviser.
A review calendar that survives a busy quarter
The habit is small: refresh values, recalculate the shares, compare with the written target, and note the gap in one line. Lakshmi keeps a short log so she can see her portfolio over time, rather than reacting to whatever the current screen says. The log, not any single snapshot, is what shows drift building.
Westro turns current values into an allocation view as holdings update. The arithmetic stops being a Sunday project and becomes something you read. Official broker, depository and fund-house statements remain the source of truth for units and transactions. Displayed prices may be delayed, so confirm anything you intend to act on before you act.
Frequently asked
Use current value to see today’s mix and today’s risk. Purchase value answers a historical question about how your contributions were distributed, which is interesting but not decision-ready.