Gold has delivered the highest returns over 20 years, outperforming all major asset classes with 15% gains

December 11, 2025

New Delhi: Gold outperformed most asset classes over the long term, delivering a compounded annual return of 15 per cent in rupee terms over 20 years, compared with 13.5 per cent for Indian equities as per Nifty 50 returns, a report said on Thursday.

The Funds India report showed that real estate returned 7.8 per cent and debt delivered 7.6 per cent over the period, with Indian equities’ 20-year return trailing the 14.8 per cent return from US equities as per the S&P 500 returns.

Over a shorter five-year period, gold’s performance was stronger, with a five-year CAGR of 23.2 per cent versus 16.5 per cent for Indian equities and 19.6 per cent for US equities, Funds India said.

Equity Segment Trends and Market Behaviour

Mid- and small-cap stocks outperformed large caps over 20 years, with the Nifty Midcap 150 total return index at 16.5 per cent and the Nifty Smallcap 250 TRI at 14.3 per cent, compared with 13.8 per cent for the Nifty 100 TRI. Mid and small cap stocks show higher volatility, but also strong long-term compounding, with midcaps delivering 19.6 per cent CAGR over 22 years.

Analysts attributed gold’s rise to central bank buying, safe-haven demand amid aggressive central bank policies, geopolitical concerns, softening in rupee and high equity valuations.

Debt Stability and Market Recovery Patterns

The report highlighted debt markets remain steady, with 7–8 per cent long-term returns, reaffirming their role as shock absorbers in portfolios.

Market corrections of 10–20 per cent occur almost every year, yet 75–80 per cent of years still end positive reinforcing that volatility is temporary, while growth is permanent, it noted.

Large declines seen in the stock market of over 30 per cent historically recover within 1–3 years, often followed by strong upside, it said.

Outlook for Indian Equities

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.