Equities beat gold in long-term returns, capital protection: Report

New Delhi: Indian equities provided approximately 11.5 per cent annualised returns, compared to gold’s returns of about 8–10 per cent, based on various rolling-period analyses from 1990 to 2025, a report said on Thursday.

A study by investment management firm OmniScience Capital revealed that Nifty50 has historically provided better average returns for holding periods of three years or more, along with a significantly higher likelihood of capital protection.

The report said that there is a 98.1 per cent likelihood of principal protection in Nifty for holding periods of three years or more, in contrast to an 84 per cent probability for gold during the same timeframe.

The firm said that investors must remain invested for approximately seven years to achieve a 99.3 per cent probability of capital protection for gold.

“Gold’s role is best kept as a modest hedge, ideally not exceeding 10–20 per cent of a portfolio,” OmniScience Capital President and Chief Portfolio Manager, Ashwini Shami, said.

The report cited data showing that gold prices can significantly spike, especially during a macroeconomic crisis, and then crash significantly once the crisis is over. The percentage fall post the crisis ranged from (-) 17 per cent to (-) 44 per cent.

Comparing the S&P 500 against global gold prices, the benchmark index returned about 9.4 per cent annually over the last 40 years, against 5 per cent for gold.

The study concluded that although gold remains a safe-haven asset, both Indian and global equities are superior as a wealth builder in the long term, beating inflation consistently.

Regarding gold being used as a hedge against inflation, the investment management firm said that it found weak correlations between gold and inflation measures.

OmniScience said that the gold is more responsive to global interest rates, the movements in the US dollar, central bank purchases, and investor risk sentiment than to the Consumer Price Index (CPI).

IANS