Gold’s massive rally this year, which has easily eclipsed the equity market returns, has sparked concerns among investors about the better asset class for long-term wealth creation.
Samir Arora, Founder and Fund Manager at Helios Capital, made a case for equity investing as he shared data to reinforce a common investing notion that equities have historically delivered superior wealth creation over long horizons.
Arora’s response came to a post by Ansid Capital’s Anurag Singh on the social media platform X that stated that gold has beaten Indian equities and even the broader market over the long run, citing currency depreciation and questioning whether gold SIPs now make more sense.
The post highlighted that the Nifty 50 in US dollar terms rose from about 1,000 in 1994 to 10,500, implying a CAGR of 7.8%, while gold prices surged from $345 to $4,550 over the same period, delivering a higher CAGR of 8.6%.
Veteran fund manager Samir Arora countered the narrative as his post highlighted how right benchmarking and time selection can influence these figures.
Nifty 50 vs gold vs S&P 500
According to Arora, the Nifty 50’s total return from December 31, 1998, to today stands at 1,922.38%, translating to a CAGR of 11.78% in US dollar terms over nearly 27 years. Over the same period, gold delivered a return of 1,472.66%, or 10.74% per annum, also measured in dollar terms.
The returns look starker when compared against the US stock market. The S&P 500 returned 821.05%, or just 8.57% per annum, during this period, sharply underperforming both the Nifty 50 and gold.
However, Arora argued that if “one is comparing with S&P 500, the correct comparison should be with NSE 500 Index and not NIFTY Index”.
On that basis, Indian equities appear even stronger — The NSE 500 has generated 2,590.1% returns, or 12.96% per annum in dollar terms during the same period, according to the data shared by Samir Arora.
More crucially, Arora noted that all these gains account for the depreciation of
the Indian rupee over this long period. This assumes significance as a common concern for investors is that rupee weakness hurts the equity returns for foreign investors.
However, Arora’s post sheds another light on this argument, highlighting the dominance of equities over gold, especially the Nifty 50 index. Arora’s message is clear: For long-term investors, Indian equities still set a benchmark many assets struggle to beat.
Gold prices have seen a massive 80% surge this year, while the Nifty 50 has seen a 10% return.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
