Sensex reached new highs in 2017 but no significant growth for long term investors
2017 saw an average 10-year CAGR return of 6.8 per cent, the fourth lowest in more than two-decades.
Niti Kiran New Delhi Last Updated: December 30, 2017 | 20:30 IST
The year saw the benchmark index, Sensex, reaching new highs but unfortunately that has not translated into an equally significant growth for long-term investors. This is evident from the 10 year compounded annual growth rate calculated on rolling basis since 1990.
Now what does it means?
Suppose an investment started on February 23, 1980. Ten years later, i.e on January 01, 1990, returns would have been calculated. Then investment would have been made on the next trading day and 10 years returns would have been calculated. This process repeated till date and average returns would have been calculated for each year.
Now based on this, year 2017 saw an average 10-year CAGR return of 6.8 per cent, the fourth lowest in more than two-decades. This could be for the fact that the 10 year investments which ended in 2017 started somewhere between 2007 & 2008 which was a part of the multi-year bull run phase, so returns were compromised.
But never mind, as equity investments are not always about handsome growth.