Indian equities have built a strong reputation among long-term investors for creating wealth through compounding and sustained economic growth. Over decades, domestic markets have rewarded patient investors despite periods of volatility, market corrections, and economic uncertainty. But fresh long-term data raises an important question: while Nifty generated meaningful returns, did it build enough wealth to keep pace with the stronger gains delivered by US markets?

According to FundsIndia’s latest Wealth Conversations report, Indian equities represented by the Nifty 50 Total Return Index (TRI) delivered annualised returns of around 11.4% over the last 20 years. Over the same period, investments multiplied approximately 8.7 times, underlining the strength of disciplined long-term investing in India.

Those numbers reflect a robust wealth-creation story by conventional standards. However, the comparison becomes more compelling when global markets enter the picture.

The report showed that US equities significantly outperformed Indian markets over the same period. The S&P 500, adjusted for Indian rupee returns, delivered annualised returns of around 15.2% over 20 years and multiplied investor wealth nearly 17.1 times.

That means investors with exposure to US markets would have seen considerably stronger wealth creation over the long run.

MUST READ: Nvidia strong results: Shares up 20x in 44 months; dividend zooms 25x, m-cap tops 125% of India Inc

The gap

The gap becomes even more pronounced in technology-driven benchmarks. Nasdaq 100 generated annualised returns of around 20.4% over two decades, transforming investments into nearly 41 times their original value.

The findings reinforce a broader investment theme increasingly discussed among financial planners: while domestic equity exposure remains critical, global diversification can potentially improve long-term portfolio outcomes.

Yet the report also makes clear that India's long-term investment story remains far from weak.

Historical data showed Indian equities delivered approximately 13.2% annualised returns over more than 35 years, with investments multiplying around 86 times since 1990. This suggests that despite shorter-term fluctuations, Indian markets have continued creating substantial long-term wealth.

The report also highlighted significant differences within India's own equity landscape.

MUST READ: Back-to-back upper circuits- How PM Modi's Melody to Meloni is sweetening up this stock

Mid-cap and small-cap segments

Mid-cap and small-cap segments generated stronger long-term returns than broader large-cap indices. Nifty Midcap 150 TRI delivered annualised returns of 14.6% over 20 years, while Nifty Smallcap 250 TRI generated 12.7%. In comparison, Nifty 100 TRI posted returns of 11.8%.

Actively managed diversified equity mutual funds also demonstrated strong long-term performance. Funds including Nippon India Growth Mid Cap Fund and HDFC Flexi Cap Fund delivered annualised returns ranging between 13% and 15% over extended periods.

Another major takeaway from the report was the importance of investment duration.

Data suggested the probability of negative returns declined sharply as holding periods increased. Seven-year and ten-year investment horizons saw almost no instances of losses in Indian equities. Further, Indian equities delivered more than 10% returns in nearly 85% of seven-year rolling periods.

MUST READ: SpaceX IPO: Elon Musk eyeing trillionaire status? Money maths explained here

The report also challenged fears around market volatility. Historical data showed markets experienced temporary corrections of 10–20% almost every year, yet roughly 80% of calendar years still ended with positive returns.

For investors hesitant about deploying large sums at once, FundsIndia suggested staggered approaches through SIPs and STPs to reduce timing risk.

The answer to the question, therefore, appears nuanced: Nifty built substantial wealth over two decades—but US equities built even more.