Category: CAGR Knowledge Series

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CAGR Insights – 30 Jan 2026

CAGR Insights is a weekly newsletter full of insights from around the world of the web.

What we are reading this week

  • There’s Always Room for Quality: Read here
  • Gold Price Pattern Shows Where the Market May Go Next: Read here
  • Critical minerals are ‘strategic choke-points’ in energy transition: Read here

From Red Screens to Lifetime Riches: Raj’s Untold Saga of Mastering Long-Term Investing

We hear you—loud and clear. Portfolios flashing red. Returns not exciting investors for nearly two years. The Nifty’s grind through 2024–2026, Fed rate hikes, Trump’s whims and fancies, and relatively slower corporate growth have tested everyone’s patience.

“Two years down… we came looking at phenomenal returns of Indian markets in 2023-24, when will we experience the same?”

These are the calls filling our days.

One such call came from a client who joined us in June 2024. After months of investing, his portfolio showed no meaningful returns. Anxiety had set in, and his faith in equities was wavering. Instead of offering reassurance through words alone, we showed him something more powerful—the journey of one of our long-standing clients, Raj Patel (name changed), a 48-year-old Mumbai-based investor with over 13 years in the market (even before he became our client).

We began with Raj’s early years – he was investing Rs. 1 lac per month in a portfolio of equity mutual funds since 2013. While his investments increased over time, we have assumed that he continued investing Rs. 1 lac since then.

The below chart showcases Raj’s journey of investing Rs. 1lac per month in a portfolio of four funds (Rs. 25K each). Further, we have assumed that the portfolio remains unchanged for the sake of simplicity. The four funds chosen are –

  1. HDFC Midcap Fund Regular Growth
  2. ICICI Equity and Debt Fund
  3. UTI Index Fund
  4. Franklin Flexi Cap Fund

Raj’s journey offers three very important learnings.

LEARNING 1

The first few years of investing represents a story which can look very different from reality – both on the upside and the downside.

For Raj, the first few years looked exceptional. 20% XIRR in the first year and 44% in the following year (driven by BJP led rally in 2014). The return then fell to 16% XIRR in the fourth year and let’s be honest – Raj was disappointed because by now he had gotten used to seeing >20% returns at any point in time.

This is when he came to us. And we helped him set more realistic expectations.

After seven years of consistent investing, Raj’s portfolio stabilized and began delivering a healthy XIRR of 16–18%. Just for context, this means that his money is likely to double every 5 years.

In the current scheme of things, a lot of first-time investors started investing in mutual funds after witnessing the bull market returns that their friends, relatives and colleagues made from 2021-2024. For anyone who has been investing for less than 3 years, the returns look anything but exciting.

But what is important to understand, is that the combined effect of time, compounding, and staying invested smoothens volatility.

Imagine if Raj had started his SIP in March 2018, his XIRR journey would have looked like below.

LEARNING 2

We together with Raj witnessed a completely different chapter in March 2020.

Nifty 50 fell by 35% from its last high and Raj’s portfolio XIRR dropped to just 2%. Imagine – Even after investing for 7 years, Raj witnessed a massive erosion of all his past gains.

Can this happen to you?

Absolutely. Black swan events cannot be predicted and the outcome could look very depressing even as a long-term investor. All equity investors should therefore know that while these instances will be rare and few, they can happen.

LEARNING 3

Raj did get uneasy in March 2020. But he had also seen 2008 and he somewhat understood black swan events.

Moreover, Raj did not need to redeem. His equity investments were aligned with long-term goals, and his near-term cash needs were already planned elsewhere. He was comfortable to stay put, let his SIPs run.

But what if Raj had a planned use of his investments in March – April 2020. What if his son was going into college and he had planned to use his mutual fund investments to fund the cost?

He would have had to exit at a 2% average annualized return – an extremely unexpected outcome and something nobody deserves.

Ideally, if Raj had a planned utilization of funds in 2020, he should have started shifting his corpus to safer avenues starting 2017/2018. Such a shift to a mix of Debt, Arbitrage, Hybrid funds would have ensured that he books gains at much higher returns and subsequently protects his capital.

This is something that most investors do not think enough about. Especially in the middle of a bull market, one tends to put everything in equity investments. Even funds which they know they will need in the next 2-3 years. Ignoring the possibility of a big market drawdown is a common mistake and one which we under-estimate more than we should.

The key takeaway is that markets are rewarding. But for it to be rewarding for you, it has to be coupled with patience, endurance and meticulous planning.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 23 Jan 2026

CAGR Insights is a weekly newsletter full of insights from around the world of the web.

What we’re reading this week

  • Here’s the secret to spending money with no regrets: Read here
  • Why your salary alone does not decide your loan terms: Read here
  • Deep Structural Reforms supporting India’s economic resilience: Read here

How GIFT City’s USD Mutual Funds Revolutionize NRI Portfolios

Priya Sharma, a savvy Mumbai-based marketing professional, has always invested with discipline—steadily building wealth through SIPs in mutual funds. With ambitions of funding her daughter’s US education and eventually settling abroad, she sensibly diversified into international funds of funds.

But her confidence is now fraying. RBI’s long-standing overseas investment cap has choked access to global funds, and each morning the weakening rupee tells a harsher story. A 12–15% return in India shrinks to single digits in dollar terms, quietly wiped out by a 4–5% annual currency depreciation.

Despite doing everything right, Priya feels shortchanged. Her savings aren’t failing—India’s currency is. And she’s left asking why disciplined investing still can’t protect her global goals.

Priya then discovers GIFT City—more than a location, a financial lifeline built for investors like her. Launched in 2015 as India’s first International Financial Services Centre (IFSC), it allows mutual fund investors to access global markets without the burden of stock picking.

With investments denominated in foreign currency, gains are insulated from rupee depreciation offering seamless global exposure. It’s a bold policy vision—designed to help investors earn global returns without their wealth being dragged down by INR volatility.

Priya leans in—this isn’t a distant promise, it’s already live. GIFT City offers foreign currency-denominated mutual funds with a simple, powerful advantage: invest in foreign currency, redeem in foreign currency.

She can put dollars to work from her Indian salary, see her NAVs compound in USD, and eventually withdraw in dollars for her life overseas— only one time conversion at the start of investing, no rupee erosion, no depreciation drags at all.

Why does this matter now?

The rupee’s decline isn’t slowing. Trade deficits, oil dependence, and shifting global capital flows continue to weigh on INR. What looks like a 10% gain in rupee terms often shrinks to just 5–6% when measured in dollars.

For investors like Priya with global goals, this gap is costly. GIFT City changes the equation.

Real-World Use Cases That Resonate

Use Case 1: Funding Foreign Education.

  1. Priya’s daughter plans a US master’s degree—about $50,000 per year in tuition. With traditional India-based investments, Priya would redeem in rupees and convert to dollars later, risking a 15–20% cost increase over four years due to rupee depreciation.
  2. GIFT City’s USD-denominated mutual funds offer a smarter route. Priya invests and redeems directly in dollars—no forex conversion loss, no TDS—keeping her education corpus aligned with actual expenses, subject to annual LRS limits.

Use Case 2: Global Diversification

  1. Diversification is the real game-changer. Priya no longer wants an India-only portfolio. Through GIFT City, she can access outbound funds investing across global markets—US, China, Europe and more—all denominated in USD.
  2. The result? Smarter risk spreading. US tech can cushion Indian market swings, and global exposure brings balance to her portfolio. With IFSCA’s single-window approvals, onboarding is simple and seamless—global diversification without the usual friction.

Use Case 3: Outbound Investing:

  1. To fund her overseas ambitions, Priya makes her strongest move yet—outbound investing through GIFT City. Via USD-denominated mutual funds and AIFs, she gains direct exposure to global leaders like Apple, Tesla, Nasdaq indices, and Chinese equities from day one.
  2. This isn’t just diversification, it’s borderless growth. Her investments are aligned with her future expenses, insulated from INR depreciation, and purpose-built for Indians with global goals.

Priya’s story reflects the reality of thousands of Indian investors today. If your goals are global, your portfolio should be too.

While this sounds exciting—and it is—it’s important to note that GIFT City investing makes the most sense beyond a certain net worth. Here’s why:

  1. LRS-based funding: Investments are routed through the Liberalised Remittance Scheme, which means additional bank-level documentation and compliance, including Form A2.
  2. Tax reporting complexity: Since these investments are USD-denominated, they require additional disclosures in your income tax returns, adding to compliance effort.
  3. DIY investor caution: For self-directed investors, it’s critical to understand the underlying global exposure of the mutual fund—geography, sectors, currency, and concentration—before investing.

In short, GIFT City is a powerful tool, but it’s best used thoughtfully, with the right scale and clarity.

PSA: Investing in a country ≠ just market risk

A lot of investors miss this: when you invest in another country, you’re not only betting on its companies, but you’re also taking on that country’s currency and macro-economic risk.

Suppose Priya invests ₹10 lakh in a US-focused mutual fund when 1 USD = ₹75. She buys $13,333 worth of US stocks.

Insights:

  • Even though the US fund gained the same 10% in all cases, INR returns vary widely depending on currency movement.
  • A weakening rupee boosts returns for Priya, while a strengthening rupee erodes them.
  • This is why investing abroad without considering currency risk can be misleading—your INR performance may look very different from your USD performance.

Priya’s journey highlights a crucial truth: disciplined investing in India alone may no longer be enough for global goals. GIFT City’s USD-denominated mutual funds offer a practical, efficient way to align investments with overseas aspirations—providing currency protection, global diversification, and seamless access to international markets. For investors seeking to secure education costs, build borderless portfolios, or hedge against INR depreciation, the opportunity is real and timely.

As a trusted mutual fund distributor, we also offer access to GIFT City products, helping our clients invest confidently in global opportunities. Reach out to us to explore how you can give your portfolio a truly international edge.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 17 Jan 26

CAGR Insights is a weekly newsletter full of insights from around the world of the web.

What we’re reading this week?

  • How a Farmer’s son achieved financial stability starting from a salary of Rs. 5000: Read here
  • How the Sensex Keeps Changing Over Time: Read here
  • Why India’s struggling wool economy offers a cautionary tale for policy makers: Read here

Gold or Equity? The Smarter Way to Win Is Not Choosing Sides

We all saw a phenomenal run by gold recently while Indian equity markets are down from last 1.5 years. This would have made all of us question our asset allocation and would have tempted us to invest more in gold rather than equities. In today’s newsletter we address this confusion.

Returns

A common misstep among investors is directly comparing gold with equities to determine which asset class is outperforming at a given time. However, it’s crucial to recognize that gold and equities serve different roles in a portfolio. Rather than viewing them as competitors, they should be seen as complementary assets.

Gold often acts as a hedge during periods when equities underperform. For instance:

  • 2007–2009: Amid the global financial crisis, equities plummeted while gold prices surged.
  • 2011–2012: Equity markets faced stagnation, but gold continued its upward trajectory.
  • 2020: During the COVID-19-induced market crash, gold prices rose sharply.
  • 2024–Current: Equity markets experienced stagnation and drawdowns, whereas gold maintained its growth.

These instances highlight gold’s potential to provide stability during equity market downturns. Every time there is turmoil which threatens stability, money tends to move towards gold which is considered to be a safe store of value.

Because of the above pattern, it is commonly said that gold and equities move in opposite directions—but that’s not entirely accurate. There have been several periods when both gold and equities have delivered strong performance simultaneously.

  • 2005: In 2005, India’s equities surged 43% on 8.4% GDP growth from manufacturing/services boom and FDI, while gold rose 20% amid global liquidity, China demand, and rupee stability.
  • 2006: In 2006, India’s equities surged on sustained economic expansion, foreign investment inflows, and sector booms in real estate and IT despite mid-year volatility, while gold advanced amid ongoing Chinese commodity demand, loose global monetary conditions, and strong seasonal purchases.
  • 2009: Post the financial crisis, equities rebounded, and gold continued its ascent.
  • 2023-2024: Geo-Political uncertainty driving demand for Gold from Central Banks

Is Gold always a positive trending asset class?

No. Just like any asset class; Gold has gone through periods when it has given negative returns to investors. Gold has also gone through long periods of stagnation.

But the bigger question today is to decide whether to invest in Gold or Equity.

Before we get to the narrowing of the answer, let us look at how gold and equity stack up against each other over the long term.

We looked at the 5-year rolling returns of 24ct Gold, Nifty 50 and NSE 500 since 2000.

The results are noticeable.

  • Average 5-year rolling returns for Gold is slightly lower than that of Nifty 50 and NSE 500
  • Gold has more instances of negative return than either of the indices. So yes, Gold has gone through a greater number of 5-year periods when it has delivered negative returns
  • Both Gold and NSE 500 have given >15% return ~40% of the times
  • Gold and equity have more periods of negative correlation than positive correlation. The below table summarises how gold and equity behave in different circumstances.

Any investment decision should ideally be driven by two aspects – How much you allocate and how much you pay.

Asset Allocation in Gold

We have always believed that a 10-15% of net worth allocation to Gold is an optimum one. This is because Gold is an asset class which has a single dynamic. Unlike equity, which is a combination of thousands of businesses, there is no diversification within Gold as an asset class.

Further, Gold prices are driven solely by demand and supply and there is no underlying business cashflow that defines gold as an asset class.

On the other hand, equity prices are also a function of demand and supply but equity as an asset class benefits from ownership in businesses. Its returns come from earnings growth, dividends, and valuation expansion, which makes it a wealth-creating asset over the long term. As economies grow and companies expand, equities tend to compound wealth significantly.

So Gold is a single product asset class with a single dynamic of price driver. Anything beyond 10-15% can serve as a concentration risk.

How much you pay?

How much return we make out of an investment is determined by at what point we invest and for how long are we willing to wait.

There is no strict science to calculate the right price point to enter. The leap of faith has to depend on data and a little bit of what you feel.

For example, to decide where to put your money today, you need to think that if Gold has given 2X returns in the last 12-18 months, can it double from here in the next 3 years. If the answer is yes, you would want to invest more.

Once we understand the long-term potential of an asset class, the best time to invest is when the asset class has been lying low and not garnering the maximum interest. The second-best time is to invest when the asset class has gained momentum, and you see further room on the upside.

Conclusion

Both equity and gold are long term asset classes, and any investment should be made keeping at least 5-7 years of time frame in mind.

For those who have a low allocation to Gold, build long term allocation through SIPs and STPs. For those who have adequate allocation, avoid building long term allocation. Any tactical call should be backed by strong data backed views.

Gold and equity are not rivals—they are complements. One should use equity to grow wealth and gold to protect purchasing power and manage risk across cycles.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 10 Jan 2026

CAGR Insights is a weekly newsletter full of insights from around the world of the web.

Here’s what we are reading this weekend:

  • How the ‘No Buy 2026’ trend could help you get your budget on track this year: Is this the year of cutting back? Read here
  • Is a US market correction coming? Read here
  • Budget 2026: Why do India’s farms suddenly matter? Read here

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CHINA: THE EMERGING TECH HEGEMON

In this edition, we turn our spotlight to China. While global markets remain fixated elsewhere, China is quietly building the future through tech-led manufacturing, robotics, and AI—and with valuations still depressed, this growth story may be one of the most interesting opportunities for investors today.

China is the second largest economy in the world after United States. It’s GDP in 2024 stood at 18.49 trillion (US dollars) which is 4 times the GDP of the 3rd largest economy in the world – Japan. China’s growth story is not just inspiring but also the one we can learn from, their reforms which are characterised by long term visualization and rapid economic growth.

In its 15th five-year plan held in October 2025, the Chinese government highlighted their plans to stay resilient in a volatile world with technological self-sufficiency, and innovation remaining their primary focus.

During the new FYP period (2026-2030), China aims to seek breakthroughs in areas such as advanced tech driven manufacturing and develop a lead in AI with the aim to reduce its dependence on foreign countries. 

To achieve its vision, China has been focusing on R&D as a key driver for achieving its goals

China’s government R&D spending is set to surpass that of the US in 2026, with an 8.3% budget hike focused on basic science.

How does China compare against US on the technological landscape?

Tech Driven Manufacturing

China has been expanding into emerging sectors like batteries, electric vehicles (EVs) and autonomous vehicles.

Developing autonomous-driving capability requires a large installed base of modern vehicles that can run advanced driver-assistance systems. China has built a base on a scale no other country can match, largely because of its overcapacity. 

More than 60% of the EVs sold in China now come equipped with driver-assistance features that support partial automation, often at no additional cost for consumers.

And China’s scale in the whole EV space provides the necessary base for driving automation. The total EV sales in 2024 reached 16.9 million and China dominates this market accounting for over 67% of the total world sales.

China’s massive scale in EV is supplemented by the huge workforce behind it.

BYD’s massive workforce scale—600K-700K total employees versus Tesla’s 125K—gives China a decisive edge in rapidly deploying AI across physical ecosystems like EVs, drones, and factories.

China’s dominance in the EV space is not just domestic. It has also been able to garner a significant share globally, as evidenced by the rising number of exports. 8 out of the top 11 EV companies’ origin from China and are less expensive compared to their US counterparts.

What makes China interesting at this point is the fact that EV supremacy will be faster for countries which have access to rare earth materials like cobalt, lithium, graphite etc.

If we dig deeper and look where do these rare earth materials reside, we realize that China is way ahead of the entire world.  

China is projected to have the largest share (60%) of global refined critical mineral supply by 2030.

Nickel is the only outlier in the rare earth minerals where China lags Indonesia (71%). We feel that China’s supremacy in rare earth materials places it at a very advantageous position to leverage the EV wave over the next decade.

How has the equity market perceived the EV space so far?

Despite China’s dominance in the EV ecosystem, this leadership is yet to translate into commensurate equity market returns.

In fact, leading Chinese EV players are currently trading at significantly lower valuations compared to their global peers, despite stronger scale, integration, and cost advantages.

Robotics

What was once seen as a weakness — chronic manufacturing overcapacity — has effectively become China’s strategic strength. Overcapacity is what helped China mass deploy autonomous driving capability on modern vehicles.

The same dynamic is now playing out in robotics. Buoyed by generous local subsidies and a strong national industrial policy push, robot manufacturing in China has expanded rapidly in recent years. Chinese factories now install around 280,000 industrial robots annually — roughly half of the global total — with nearly 60% of those units supplied by domestic manufacturers offering significantly cheaper machines.

According to the International Federation of Robotics, China accounted for 54% of all industrial robot installations in 2024. And that percentage is expected to grow in coming years.

Artificial Intelligence

Artificial Intelligence is the next big technological advancement that is taking the world by storm. And this is one space which are witnessing the emergence of two big hegemons – US and China.

The USA-China AI competition is reshaping global technology landscapes, driving unprecedented innovation while creating new geopolitical tensions. Rather than a winner-take-all scenario, we’re likely heading toward a bifurcated AI ecosystem where both superpowers excel in different domains.

China is investing heavily in creating home – grown AI talent. There is considerable focus on rapid skill development in the AI space. However, better opportunities in the US have been causing some level of brain drain from China to the US. It will be interesting to observe how China addresses this issue in the years to come.

Further, China is much ahead in testing and adopting some of the AI technologies on their domestic industries. This should give China the benefit of having a faster and bigger feedback loop to re-iterate and evolve with speed.

Which country captures the larger AI market-share will depend on who is able to create a more sustainable eco-system. And this eco-system will be driven by two key aspects:

  1. Adequate electricity which can fuel the needs of AI systems
  2. Supporting infrastructure that allows these systems to operate safely, such as data centres

Not only does US have a much older power grid, but it is also far behind China in terms of electricity generation capacity. Just for context, China added 427GW of new power capacity in 2024, which is more than one-third of the entire US grid and more than half of all global electricity growth.

Perhaps even more important, China added 304GW of solar generation capacity in the first 10 months of 2025 – greater than the entire installed solar capacity in the US of about 259GW.

Not to mention, Industrial electricity bills are also on average 30% cheaper in China than in the United States.

China is investing huge sums to build new capacity in order to keep up with rising electricity demand. China aims to establish a new grid system to support a west-to-east power transmission program exceeding 420 gigawatts by 2030, according to the guidance issued by the National Energy Administration and the National Development and Reform Commission.

While China seems to have a much better hold on the electricity front, The People’s Republic has lagged the United States in building new data centres and bringing more computing power online. This has resulted in US Chip Control continuing to remain a formidable constraint. Bernstein’s research outfit’s analysts estimate Chinese firms will spend just $147 billion on AI capital expenditures in 2027. That’s less than Amazon’s expected total capex that year, per Visible Alpha forecasts.

As AI moves from our screens into the physical world, the question is no longer whose models hit technical benchmarks, but who can build and sustain an ecosystem that embeds AI into everyday products and services. Viewed through this lens, China enjoys a distinct advantage that does not show up in standard measures of AI performance. Counterintuitively, China’s strength stems from what economists have long treated as one of its deepest structural weaknesses: overcapacity.

Conclusion

China and the US are the two hegemonic forces shaping the global economy, yet the market outcomes for both could not be more different.

While China has spent the last 15–20 years aggressively scaling its technology-driven manufacturing base and expanding its economic footprint, its capital markets have yet to fully reward this growth in the way US markets have.

Over this period, China has built world-class capabilities across EVs, batteries, solar, electronics, and now robotics, even as its equity valuations have remained compressed.

Chinese markets remain undervalued at ~13x forward P/E (40% below S&P 500).

The tech sector in China particularly remains undervalued compared to US.

However, if we look at the last two-year trajectory of the Chinese markets, we can see that there seems to be a roaring come back. Perhaps, the initiatives are now paying off as investors are returning to Chinese markets.

As we begin to see early signs of market uptick, we believe this could mark the start of a more sustained re-rating cycle in Chinese markets, especially given the strategic positioning of its industries and the relatively low valuation multiples at which many Chinese stocks continue to trade.

This could very well be the start of momentum in the Chinese markets!

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.