Gold shines with 15% returns, beats Indian equities & real estate in 20 years: Report

Gold has outperformed both Indian equities and real estate as an asset class over the past two decades, according to a report. Based on rupee returns, gold achieved a compounded annual growth rate (CAGR) of 15% against Indian equities, which recorded a 13.5% CAGR as measured by the Nifty 50. Real estate and debt trailed significantly, yielding 7.8% and 7.6% respectively. Indian equities over the same period also lagged behind US equities, which delivered a 14.8% CAGR as tracked by the S&P 500. Over the latest five-years, gold's performance was even stronger, with a five-year CAGR of 23.2%, outperforming Indian equities at 16.5% and US equities at 19.6%, a report by FundsIndia said.

Analysts attributed gold’s rise to central bank buying, safe-haven demand amid aggressive central bank policies, geopolitical concerns, softening in the rupee, and high equity valuations. The report highlighted that debt markets remain steady, with 7–8 per cent long-term returns, reaffirming their role as shock absorbers in portfolios. Within equities, mid- and small-cap stocks outpaced large-cap stocks over the 20-year period, with the Nifty Midcap 150 total return index at 16.5% CAGR and the Nifty Smallcap 250 TRI at 14.3%, compared to 13.8% for the Nifty 100 TRI. Mid-caps delivered 19.6% CAGR over 22 years, though with higher volatility.

Market corrections of 10–20% occur almost every year, yet 75–80% of years still end positively, reinforcing that volatility is temporary, while growth is permanent, it noted. Large declines seen in the stock market of over 30% historically recover within 1–3 years, often followed by strong upside, it said. HSBC Global Investment Research stated, "A recent report from HSBC Global Investment Research said that a double-digit return from Indian equities is likely next year if policy measures revive consumption along with a favourable regulatory regime."