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Stay invested in equities over the long term for better returns

September 19, 2016 14:34 IST

We have all heard it said that while equities are volatile, they have the potential to boost portfolio returns over the long run.

We decided to check the truth in this statement by creating three portfolios, with varied levels of equities.

We used indices to create portfolios and kept the investment horizon at 15 years.

Stay invested for a long term

The indices included are Nifty 50, an index of large-cap stocks; the S&P 500 IDX, an index made up of large- and mid-cap stocks; MSCI World NR, an index representing international stocks; and Crisil Composite Bond Fund IX, an index composed of debt and gold.

The first portfolio has an equity allocation of 65 per cent, the second has 55 per cent, and the third, 45 per cent.

The portfolio allocation with 65 per cent equity allocation garnered the highest return of 14.1 per cent, while the one with 45 per cent had the lowest return of 12.6 per cent.

Priya Nair
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