Country Equity Index Drawdowns vs. Returns

Previously, we saw how US Midcaps have out-performed Indian midcaps in dollar terms (US vs. Indian Midcaps.) But that is only one part of a bigger question: How do Indian equities stack up with the rest of the world?

Here is a chart of peak drawdown (largest loss) vs. cumulative return for country equity total return NASDAQOMX indices:
India: red square. World: black triangle. Full key: here.

Sure, Indian equities have put up a decent show. However, they have by no means been the best market out there. Investors would have got similar returns but with a vastly lower drawdown if they had just bought a NASDAQ-100 ETF (XNDX on the chart, ETF ticker: QQQ). Moreover, diversifying and asset allocation strategies are cheaper in the US than in India – both in terms of management fees and tax impact.

Related: Funding Your Dollar Dreams.

Source: NASDAQOMX data from Quandl.

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