Over the last 20 years, gold, equity and debt have outperformed each other at different times. Hence,the Rank 1 asset class in terms of returns keeps rotating
- Historical returns tend to bias investors towards the asset class which has performed well recently.
- However, this recency bias could result in investors chasing momentum and picking an asset class at an inopportune time.
- Diversification helps reduce such risks in your portfolio.
Diversification helps reduce such risks in your portfolio.
You can see from table below, different asset classes are performing differently in different financial years
| Returns | Asset Class Rank | |||||
|---|---|---|---|---|---|---|
| Fiscal Year | Equity | Debt | Gold | Equity | Debt | Gold |
| FY 1999 | -3% | 13% | -2% | 3 | 1 | 2 |
| FY 2000 | 42% | 19% | 2% | 1 | 2 | 3 |
| FY 2001 | -25% | 13% | 0% | 3 | 1 | 2 |
| FY 2002 | -2% | 29% | 22% | 3 | 1 | 2 |
| FY 2003 | -13% | 17% | 8% | 3 | 1 | 2 |
| FY 2004 | 81% | 13% | 16% | 1 | 3 | 2 |
| FY 2005 | 15% | -5% | 1% | 1 | 3 | 2 |
| FY 2006 | 67% | 2% | 39% | 1 | 3 | 2 |
| FY 2007 | 12% | 6% | 11% | 1 | 3 | 2 |
| FY 2008 | 24% | 8% | 30% | 2 | 3 | 1 |
| FY 2009 | -36% | 10% | 24% | 3 | 2 | 1 |
| FY 2010 | 74% | 0% | 8% | 1 | 3 | 2 |
| FY 2011 | 11% | 5% | 28% | 2 | 3 | 1 |
| FY 2012 | -9% | 3% | 32% | 3 | 2 | 1 |
| FY 2013 | 7% | 11% | 3% | 2 | 1 | 3 |
| FY 2014 | 18% | -1% | -11% | 1 | 2 | 3 |
| FY 2015 | 18% | 15% | -4% | 1 | 2 | 3 |
| FY 2016 | -9% | 8% | 10% | 3 | 2 | 1 |
| FY 2017 | 19% | 12% | -1% | 1 | 2 | 3 |
| FY 2018 | 10% | 0% | 8% | 1 | 3 | 2 |
| CAGR as on 31-03-2018 | 11.37% | 8.74% | 10.4% | |||
| Value of ₹ 1 Lakh | ₹ 8.62 L | ₹5.34 L | ₹7.19 L | |||
Source Bloomberg, Data for last 20 fiscal years, Mar ’98 to Mar’ 18
Proxies used for asset classes Equity – NIFTY 50, Debt – NIFTY 10 year benchmark G Sec, Gold – Spot Rate – ₹/10 Grams
