Article
Risk-Adjusted Returns of Equity vs. Gold vs. Real Estate: Investigating the Impact of Black Swan Events on the Indian Market
This study asks whether equity, gold, or real estate offers superior risk-adjusted returns for Indian retail investors, with specific attention to how each asset class behaves during major market shocks and what recovery trajectories follow. A mixed-method design is used, combining primary survey evidence from 111 investor-respondents with secondary market data from NSE India (Nifty 50 TRI), MCX and IBJA gold price series in Indian Rupees, the NHB RESIDEX residential property price index, and RBI 91-day Treasury bill rates as the risk-free benchmark, covering January 2014 to December 2024. Equity delivers the highest CAGR at 14.2 percent but also the deepest drawdown at 59.4 percent during the Global Financial Crisis; gold achieves a CAGR of 11.8 percent and a maximum drawdown of only 8.4 percent while generating positive returns in every crisis window studied; real estate records a CAGR of 6.4 percent and low measured volatility, though the NHB RESIDEX series is subject to appraisal smoothing that understates true economic risk. Investors in this sample rank gold first on overall risk-adjusted attractiveness at 55.9 percent despite equity's superior arithmetic return, a divergence driven by crisis behaviour: 36.0 percent of respondents sold or reduced equity during their most severe market shock while only 16.2 percent did the same with gold. Four of the five hypotheses are supported; H1b, which predicts that investors view equity as the superior long-run return generator, is rejected, revealing a persistent perception gap that has direct implications for portfolio design and investor education.