Every few weeks, someone asks me a version of the same question.

Sometimes it comes from an Indian investor: “If India is growing so well, why should I look outside India?”

And sometimes it comes from an NRI or a foreign investor: “If the US market has created so much wealth, why should I look at India?”

Both are fair questions but both also assume that you can identify the winning market in advance. That is the part I would be careful about.

A good portfolio should not require you to predict which country, currency, or market will dominate the next twenty years. It should be built with enough humility to admit that nobody knows.

Let me show you with twenty years of arithmetic.

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The question you cannot answer in advance

Imagine it is 1st January 2005.

You have two envelopes in front of you. One holds the Nifty 50, India’s best-known index of large listed companies. The other holds the S&P 500, a broad index of large American companies.

You must put all your money in one of them. You cannot switch for twenty years.

Which do you pick?

Many people would have picked India confidently. The economy did go on to grow several times over. But here is what happened to the money.

In rupee terms, which means after converting US market returns back into Indian rupees, over the twenty calendar years from 2005 to 2024, the Nifty 50 compounded at roughly 14.3% a year. Compounded simply means gains earning further gains over time.

The S&P 500, converted into rupees, compounded at roughly 14.1%.

Twenty years. Two very different economies. A gap of two-tenths of one percent.

That surprises almost everyone. It should. It means the confident answer many people would have given in 2005 turned out, in practice, to be close to a coin flip.

Ten – Ten

The year-by-year picture is even more useful, because it shows how uncertain the journey really was.

Of those twenty years, the Nifty won ten and the S&P 500, in rupee terms, won ten.

Not eleven and nine. Ten and ten.

Year	Nifty 50 TRI	S&P 500, INR	50:50 Rebalanced	Winner
2005	37.6%	8.5%	23.0%	India
2006	41.9%/td>	13.7%	27.8%	India
2007	56.8%	-6.0%	25.4%	India
2008	-51.3%	-22.5%	-36.9%	US
2009	77.6%	21.4%	49.5%	India
2010	19.2%	10.6%	14.9%	India
2011	-23.8%	21.7%	-1.1%	US
2012	29.4%	19.3%	24.3%	India
2013	8.1%	49.4%	28.7%	US
2014	32.9%	16.5%	24.7%	India
2015	-3.0%	5.9%	1.4%	US
2016	4.4%	15.0%	9.7%	US
2017	30.3%	14.5%	22.4%	India
2018	4.6%	4.5%	4.5%	India
2019	13.5%	34.5%	24.0%	US
2020	16.1%	21.2%	18.7%	US
2021	25.6%	30.9%	28.3%	US
2022	-5.7%	-8.9%	-1.6%	India
2023	21.3%	27.0%	24.2%	US
2024	10.1%	28.6%	19.4%	US

The wins did not come neatly. India led early, America took several later years, and both markets had stretches where they looked obviously superior.

Zoom out, and neither market was.

That is the heart of the argument. Nobody knew. Each confident view was right for a while and wrong for a while. Nobody could have told you in advance which phase they were living through.

So what if you refused to choose?

Here is where the lesson becomes practical.

Suppose that in 2005, you did the least clever thing imaginable. You split your money 50:50 between the two markets.

Every 1st January, you rebalanced back to 50:50. Rebalancing means bringing your portfolio back to its original mix. If India had run ahead, you sold a small part of India and added to the US. If the US had run ahead, you did the reverse.

No forecasting. No heroic market view. Just a rule and a calendar.

That portfolio won zero of the twenty years.

It was never the best performer. Not once. By design, it always landed between the two markets, behind the winner and ahead of the loser. Every January, it would have looked ordinary.

And yet, over the full twenty years, the 50:50 portfolio compounded at about 15.1% a year, ahead of India-only at 14.3% and ahead of the S&P at 14.1%.

₹100 became roughly ₹1,442 in the Nifty. Roughly ₹1,409 in the S&P. And roughly ₹1,654 in the boring middle option that never won anything.

Twenty-Year Summary, INR terms

Metric	Nifty 50 only	S&P 500 only	50:50 Rebalanced
CAGR	14.3%	14.1%	15.1%
Annual volatility, SD	27.4%	16.2%	17.5%
Worst single year	-51.3%	-22.5%	-36.9%
Growth of ₹100	₹1,442	₹1,409	₹1,654
Years won	10	10	0

The portfolio that came first in no single year finished first in the only race that mattered.

This is not magic. It is arithmetic.

The mechanism matters.

First, low correlation. Correlation is the degree to which two investments move together. If they rise and fall at the same time, correlation is high. If they behave differently,
correlation is low.

Across those twenty years, the annual returns of the two markets barely moved together. The correlation of their calendar-year returns works out to around 0.24. Marcellus Investment Managers, whose research on this I would recommend to anyone, measured five-year rolling correlations between the S&P 500 and the Nifty generally sitting in the 40–70% band. Either way, the point holds: these two markets are driven by genuinely different things.

When the IL&FS crisis hit India in late 2018, Indian equities fell while US equities rose. When the US went through its rate-hike shock in 2022, the reverse happened. Each market has its own crises, and they mostly do not share a calendar.

Divergence During Crises

Event	Period	S&P 500	Nifty 50	50:50
Demonetisation	Nov to Dec 2016	+8.0%	-5.1%	+1.4%
IL&FS crisis	Aug to Oct 2018	+2.8%	-10.1%	-3.7%
US rate hikes + Ukraine	Jan to Oct 2022	-10.1%	+0.9%	-4.6%
COVID outbreak	Feb to Mar 2020	-18.7%	-27.3%	-23.0%

Second, rebalancing.

This is the part most people miss. Selling the winner every January and topping up the laggard forces you to buy what has become cheaper and less loved, mechanically and without emotion.

Low correlation gives you the raw material. Rebalancing converts it into return.

The part that actually matters more

If the story ended at “slightly higher returns,” it would be a nice curiosity and not much else.

The real prize is the ride.

The India-only portfolio swung around with an annual standard deviation of roughly 27%. Standard deviation measures how sharply returns move around their average. In plain language, it tells you how bumpy the journey feels.

In 2008, India-only fell by more than half. The 50:50 portfolio’s volatility was closer to 17.5%, around a third less, and its worst year was a drawdown of about 37%. A drawdown means the fall from a previous high to a later low.

I have been in this business long enough to say this difference is worth far more than the extra 0.8% a year. A 51% drawdown is where investors capitulate. That is where the SIP, your monthly mutual fund investment, gets stopped, the portfolio gets liquidated near the bottom, and a twenty-year plan quietly becomes a five-year one.

A 37% drawdown is painful. I will not pretend otherwise. But it is often survivable in a way that the other fall is not.

Higher returns and lower volatility, at the same time. Harry Markowitz called diversification the only free lunch in finance. This is what he meant.

What I am not saying

I would be doing you a disservice if I stopped here, so let me be straight about the limits.

Over shorter stretches, India alone can and does win, sometimes by a lot. If your window is three years rather than twenty, a concentrated India portfolio may well beat a diversified one. The case I am making is a long-horizon case, and it should be held as one.

Diversification does not save you from everything. In February-March 2020, both markets fell hard together. When the whole world sells off, correlations go to one and there is nowhere to hide. Global diversification protects you from India-specific and US-specific shocks. It does not protect you from global ones.

And 50:50 is an illustration, not a recommendation. I used it because it is the simplest possible split and it makes the arithmetic transparent. It is almost certainly not your number. The right allocation depends on your time horizon, your income stability, your existing assets, and most of all, how you actually behave when a portfolio falls 30%.

Where this leaves you

The instinct to back the market you understand best is natural. It often comes from the right place.

Indian investors may feel India’s growth story is too strong to ignore. NRIs and foreign investors may feel the US market has already proved itself over decades. Both views have merit.

The mistake is not in respecting either market. The mistake is assuming you can know, in advance, which one will reward you better over the next twenty years.

Global allocation is not a bet against India. Allocating to India is not a bet against the rest of the world. Different markets can play different roles in the same portfolio.

I am not asking you to believe America will beat India, or India will beat America. The last twenty years suggest nobody can call that. I am asking you to build a portfolio that does not require you to know. That is a much easier thing to be right about.

For a long time, acting on this was genuinely difficult. The routes were clunky, the paperwork opaque, and the tax treatment unclear. That has changed considerably, and it deserves its own piece. For now, I would leave you with one number.

Ten and ten.

Twenty years. Two of the world’s great equity markets. A perfect tie. If the honest answer to “which market wins” is nobody knows, then the honest portfolio is one that does not need an answer.

Sources and notes

S&P 500 total returns (dividends reinvested) by calendar year: index total return data, 2005–2024.

Nifty 50 Total Return Index calendar-year returns: NSE Indices.

USD/INR year-end reference rates: RBI.

Correlation, volatility, maximum drawdown and the 50:50 annually rebalanced series: computed from the above. Rebalancing assumed on the first trading day of each calendar year. Returns are gross of tax, fees, and transaction costs.

The framing of India–US diversification as a “free lunch,” the five-year rolling correlation band, and the event-level divergence analysis draw on research published by Marcellus Investment Managers (Global Compounders newsletter, February 2025). Their independent 2004–2024 analysis in USD terms reached the same conclusion: a combined portfolio delivered higher returns than either market alone, with lower volatility than India-only.

In USD terms (for readers who think in dollars): over the same 2005–2024 window, the Nifty 50 compounded at approximately 10.5%, the S&P 500 at approximately 10.4%, and the 50:50 rebalanced portfolio at approximately 11.2%. The conclusion is unchanged: the currency lens shifts the absolute numbers, not the relationship between them.

Methodology, small print

• Nifty 50 Total Return Index, calendar-year returns, INR.
• S&P 500 total return, dividends reinvested, converted to INR at year-end RBI reference rates.
• 50:50 portfolio rebalanced to target weights on the first trading day of each calendar year.
• Returns gross of tax, fees and transaction costs. Indices are not directly investable.
• Correlation of annual returns across the period: 0.24.

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This article is for educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Past performance is not indicative of future results. Index returns are not directly investable and do not reflect fees, expenses, or taxes. Opulence International Wealth Management (IFSC) is a distributor of financial products and is not a registered investment adviser. Please consult a qualified professional before making any investment decision.