Worried about 18 months of flat returns? Radhika Gupta shares a reality check
As concerns grow among investors that “the market hasn’t made money for 18 months,” Radhika Gupta, MD and CEO, Edelweiss Mutual Fund has shared a simple but important reality check, that this kind of phase has happened before, and history shows it doesn’t last forever.
In a recent post on social media platform X, Gupta said she has been hearing this concern frequently and decided to share data on what typically followed such stagnant periods in the past.
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She wrote, “The market hasn't made money for 18 months! Since I am hearing this quite a bit, a perspective on what historically followed the "dead 18 month period.”
Citing data sourced from Edelweiss Mutual Fund, she highlighted instances when the Nifty delivered flat or weak returns over roughly 18 months, often referred to as a “dead period” by investors.
The data shows that while 18-month returns during these phases were modest or even negative, the following 12 months or the 36 months told a very different story. In several historical instances, the next 12 months delivered strong double-digit returns.
Even more importantly, the next 36 months after such stagnant periods often delivered solid gains.
For example, past 18-month flat periods were followed by 1-year returns ranging from strong rebounds to moderate recoveries. Over a 3-year period after stagnation, returns were frequently much stronger, underlining how markets tend to reward patience.
According to the data, between July 31, 2001 to December 31, 2002, the 18 month returns were 1.92% by Nifty and after this stagnant period, the next 12 month returns were 72% and the next 36 month returns were 159%.
Between October 31, 2001 to March 31, 2003 where Nifty gained 0.65%, the next 12 month returns were 81% and the 36 month returns were 248%. In total the data had 13 such instances and the last one or the 14th one is between August 31, 2024 to January 31, 2026 where Nifty gained 0.34% so what will be the returns for next 12 months and 36 months?
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In simple words, just because the market does not move for a year or so does not mean it is broken. Markets go through slow phases. But many times, these quiet periods are followed by strong recoveries.
According to her, wealth is built by thinking long term. If investors lose patience and exit during a dull phase, they may miss the rebound that comes later.
The last post by Gupta was appreciating Sebi’s move of introducing life cycle funds in the categorisation and rationalisation of mutual funds.
Her earlier post said that many investors commonly make the mistake of investing in a fund just because it delivered very high returns in the last one year. She believes that it is the most expensive fund that an investor has added to their portfolio.
She posted on social media platform X that, “The most expensive fund is the one you bought for last year’s returns. Return chasing feels rational. It’s usually late. Consistency looks boring. It's usually effective.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@timesinternet.in along with your age, risk profile, and Twitter handle.
In a recent post on social media platform X, Gupta said she has been hearing this concern frequently and decided to share data on what typically followed such stagnant periods in the past.
Also Read | Gold vs silver ETF: Which metal should investors prefer amid US-Israel strike on Iran?
She wrote, “The market hasn't made money for 18 months! Since I am hearing this quite a bit, a perspective on what historically followed the "dead 18 month period.”
Citing data sourced from Edelweiss Mutual Fund, she highlighted instances when the Nifty delivered flat or weak returns over roughly 18 months, often referred to as a “dead period” by investors.
The data shows that while 18-month returns during these phases were modest or even negative, the following 12 months or the 36 months told a very different story. In several historical instances, the next 12 months delivered strong double-digit returns.
Even more importantly, the next 36 months after such stagnant periods often delivered solid gains.
For example, past 18-month flat periods were followed by 1-year returns ranging from strong rebounds to moderate recoveries. Over a 3-year period after stagnation, returns were frequently much stronger, underlining how markets tend to reward patience.
According to the data, between July 31, 2001 to December 31, 2002, the 18 month returns were 1.92% by Nifty and after this stagnant period, the next 12 month returns were 72% and the next 36 month returns were 159%.
Between October 31, 2001 to March 31, 2003 where Nifty gained 0.65%, the next 12 month returns were 81% and the 36 month returns were 248%. In total the data had 13 such instances and the last one or the 14th one is between August 31, 2024 to January 31, 2026 where Nifty gained 0.34% so what will be the returns for next 12 months and 36 months?
Also Read | How should mutual fund investors think about their portfolios amid the US-Israel conflict with Iran?
In simple words, just because the market does not move for a year or so does not mean it is broken. Markets go through slow phases. But many times, these quiet periods are followed by strong recoveries.
According to her, wealth is built by thinking long term. If investors lose patience and exit during a dull phase, they may miss the rebound that comes later.
The last post by Gupta was appreciating Sebi’s move of introducing life cycle funds in the categorisation and rationalisation of mutual funds.
Her earlier post said that many investors commonly make the mistake of investing in a fund just because it delivered very high returns in the last one year. She believes that it is the most expensive fund that an investor has added to their portfolio.
She posted on social media platform X that, “The most expensive fund is the one you bought for last year’s returns. Return chasing feels rational. It’s usually late. Consistency looks boring. It's usually effective.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@timesinternet.in along with your age, risk profile, and Twitter handle.
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