Gold returns trump equities, real estate over a 20-year period: Report

Over a shorter duration of 5-years, the CAGR return from gold was even better at 23.2 per cent as compared to 16.5 per cent for Indian equities and 19.6 per cent for US equities, FundsIndia said.

Investment in gold trumped most asset classes in terms of compounded annualised returns over the long-term, suggests a note by FundsIndia. 

 

While Indian equities gave a compounded annual return of 13.5 per cent in 20 years (as measured by Nifty 50 total return index, or TRI), gold (in rupee terms) surged 15 per cent during this period. 

 

Real estate with a CAGR of 7.8 per cent and debt at 7.6 per cent were at the bottom of this pyramid, according to the FundsIndia study.

 

Return from Indian equities (in rupee terms) at 13.5 per cent over 20 years was lower than the 14.8 per cent CAGR return given by the US equities as measured by S&P 500 TRI in rupee terms, data shows. 

 

Return from real estate, meanwhile, the note said, were calculated based on NHB Residex (returns for the period December 2002 to December 2008 are considered for 5 cities, for 15 cities post December 2008 till September 2025), and are updated till September 2025. 

 

The demand for gold, explains G Chokkalingam, founder and head of research at Equinomics Research, has been led by central bank buying across the globe, which kept prices on an upward trajectory. 

 

“That apart, gold’s safe-haven appeal never dulled for the retail investors in the last few years amid aggressive central bank policies, geopolitical concerns, rupee depreciation and steep equity valuations,” he said.

 

Over a shorter duration of 5-years, the CAGR return from gold was even better at 23.2 per cent as compared to 16.5 per cent for Indian equities and 19.6 per cent for US equities, FundsIndia report suggests.

 

Despite the stellar returns, experts see more headroom for gold prices in the year ahead, which they believe will be led by firm demand amid safe-haven buying as geopolitical risks take center-stage. 

 

 

 

The other factors driving gold price upwards, they believe, include challenges in mining, limiting production and ultimately affecting supply when demand remains high. 

 

“It’s predicted that by the end of 2026, gold could rise to $5,000 per troy ounce. Global central banks are expected to maintain their gold buying momentum, which will be key to gold hitting that $5,000 value mark. Gold will continue to see significant rise, especially if current inflation and uncertainty trends persist,” said Rick Kanda, Managing Director at UK-based The Gold Bullion Company .

 

Mid, smallcaps outperform

 

With the equity segment back home, the 20-year CAGR return from the mid-and small-caps at 16.5 per cent (Nifty Midcap 150 TRI) and 14.3 per cent (Nifty Smallcap 250 TRI), respectively was higher than the 13.8 per cent for large-caps (Nifty 100 TRI), FundsIndia report said.

 

There has been a structural change in the last 10 years in how and where Indian retail investors put in their money, Chokkalingam said, with most preferring the mid-and small-cap segments to make a quick buck.  

 

“The retail investor base 10 years ago was around 6 – 6.5 crore, which has swelled to over 20 crore now. Most investors invest in the small-and mid-cap universe in order to make quick money. That said, the economic growth over the years has also helped companies in these two segments score over their large-cap peers, which translated into superior market returns for the small-and midcaps,” Chokkalingam added.