The data suggests that while Indian equities remain powerful wealth creators, adding international exposure has historically helped investors enhance returns.
For Indian investors like us, the debate between domestic and international diversification has become increasingly important. While Indian equities have generated strong long-term returns, data from FundsIndia's June 2026 Wealth Conversations report suggests that U.S. equities have delivered even higher wealth creation over the past two decades.
According to the report, the Nifty 50 Total Return Index (TRI) generated a compounded annual return of 12.1% over the last 20 years, turning investments nearly 9.8 times their original value. In comparison, the S&P 500 Total Return Index, adjusted for the dollar-rupee exchange rate, delivered 15.5% annualized returns and multiplied wealth by 17.9 times.
The gap becomes even wider in the technology-heavy Nasdaq 100 index. Over the same 20-year period, the Nasdaq 100 delivered 21.3% annualized returns, creating an extraordinary 47.4-fold increase in wealth.
Long-term growth
Despite the outperformance of U.S. markets, Indian equities have produced substantial wealth over longer periods.
Since July 1990, the Nifty 50 has compounded at 13.1% annually, multiplying investor wealth approximately 84 times over more than three decades.
Mid-cap stocks have been particularly rewarding. The Nifty Midcap 150 TRI delivered 15.6% annualized returns over the past 20 years, creating 18.1 times wealth, surpassing even the S&P 500 in terms of long-term returns. Meanwhile, the Nifty Smallcap 250 TRI generated 13.1% annual returns and multiplied investments by 11.8 times.
Why has the US outperformed?
Several factors have contributed to the superior performance of U.S. equities.
The American market hosts many of the world's largest and most profitable technology companies, including firms that have benefited from trends such as artificial intelligence, cloud computing and digital transformation. Strong corporate profitability and shareholder-friendly capital allocation have also supported returns.
Currency depreciation has provided an additional tailwind for Indian investors. Since the returns are measured in rupee terms, the gradual weakening of the rupee against the dollar has boosted gains from U.S. assets.
Wealth creation
The report noted that both Indian and U.S. equities have rewarded investors who remained invested through periods of uncertainty and market corrections.
"One of the biggest misconceptions among investors is that market corrections are exceptions. In reality, they are a recurring feature of wealth creation. Our analysis of decades of market data shows that temporary declines of 10-20% occur almost every year, yet markets have historically rewarded disciplined investors who stayed invested through volatility," said Jiral Mehta, Senior Manager – Research, FundsIndia.
"The findings reinforce an important lesson: while short-term market movements are unpredictable, long-term wealth creation has been driven by patience, asset allocation, and time in the market rather than attempts to time the market," Mehta added.
The report also showed that longer holding periods significantly reduce the probability of losses. Since inception, there have been no instances of negative returns over rolling seven-year and 10-year periods for the Nifty 50 TRI.
₹1 lakh invested 20 years ago…
Long-term investing has delivered substantial wealth creation across both Indian and U.S. markets. According to FundsIndia's analysis, an investment of ₹1 lakh made 20 years ago in the Nifty 50 TRI would have grown to ₹9.8 lakh today. The same amount invested in the S&P 500 (in INR terms) would have nearly doubled that outcome, growing to ₹17.9 lakh.
Among the top performers, the Nasdaq 100 (INR) emerged as the biggest wealth creator, transforming ₹1 lakh into ₹47.4 lakh over two decades. Within India, the Nifty Midcap 150 TRI would have turned the investment into ₹18.1 lakh, slightly outperforming the S&P 500, while the Nifty Smallcap 250 TRI would have grown the corpus to ₹11.8 lakh.
The figures underscore the power of compounding and the benefits of staying invested over the long term, while also highlighting the role that global diversification can play in enhancing portfolio returns.
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Diversification
The comparison suggests investors do not necessarily have to choose between India and the U.S.
India offers structural growth supported by favorable demographics and rising financialisation, while U.S. markets provide exposure to global technology leaders and sectors that have limited representation in Indian indices.
Ultimately, the findings indicate that diversification across geographies and staying invested through market cycles have historically been more rewarding than trying to predict short-term market movements.
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The data suggests that while Indian equities remain powerful wealth creators, adding international exposure has historically helped investors enhance returns and build more diversified portfolios.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jun 11, 2026 6:44 PM IST
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