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Forget stock market! Gold, silver delivering better returns in 2019

Mudit Kapoor     July 24, 2019

Gold continues to remain the safest bet for investors as the precious metal has outdone equities and mutual funds so far this year. Gold has given a return of 10.49 per cent as compared to Sensex, which gave a return of 5.06 per cent, and Nifty which earned investors 4.05 per cent. Equity mutual funds in the small and mid cap category performed much worse with negative return of 10 and 4.6 per cent respectively. Moreover, another precious metal Silver also gave better returns than equities at 7.5 per cent.

This trend of gold outperforming equities is similar to last year when stocks, equity mutual funds, debt mutual funds and real estate failed to impress investors. Sensex gained only 5.12 per cent whereas Nifty was up by 2.2 per cent.

Stock market

The returns derived from BSE and NSE are even less than what fixed deposits earned for investors. State Bank of India (SBI) offers an interest rate of 6.50 per cent for six months on FDs. This is higher than the BSE's return of 5 per cent and NSE's 4 per cent.

Real estate

Real-estate, which is a preferred long-term investment for many, hasn't performed well since 2016 after demonetisation and the introduction of Benami Property law. In fact, in 2018 real-estate delivered a meager 1 per cent returns. This year too, the dismal performance has continued with only 1 per cent returns for investors. The performance of real-estate, as per Anarock, will continue to be in this range for the next 2-3 years.

Mutual Funds

Even mutual funds have not lived up to the expectations. Large cap equity funds have given a return of 3 per cent in 2019, while mid cap equity funds have given a negative return of 4.6 per cent. Small cap equity funds, which carry the highest risk, have given a negative return of 10 per cent. Small cap and mid cap funds have effectively eroded investor wealth instead of creating it. Back in 2018, equity mutual funds across categories such as large cap, mid cap and small cap gave negative returns of 0.7 per cent, 11.8 per cent and 17.4 per cent, respectively.

Also read: Mutual funds vs Fixed Deposits: How FD investors had the last laugh in 2018

Safe investments trump

To sum it up, the investors who chose FDs and gold over mutual funds and real estate proved to be in a much better position. Several banks hiked up interest rates for fixed deposits of less than Rs 2 crore following rate-cuts by the Reserve Bank of India, making them an attractive savings option along with capital safety. The list includes HDFC Bank, Punjab National Bank, Kotak Mahindra Bank, Canara Bank, Axis Bank and, ICICI Bank.

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