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Charts & Analysis

Chart: US Investors Remain unimpressed by Bull Run, Returns less than a Bond ETN Since 2006

I was looking at how US Traded ETFs were doing in terms of fund flow and saw an interesting chart which tells you why US investors haven’t at all been enthused by this fantastic rally we have seen till Jan 2015, and then the market drop since then. For Indian investors, a level of 7000 is still higher than anything we saw in 2007-08 or in 2010 – but for US investors, the level is a considerable 27% lower than the 2010 highs, and 36% lower than the 2007 highs! (Source)

MSCI Index Return from 2006 To 2016

What went wrong? The Rupee, that’s what. With the rupee at 68 now the depreciation has killed returns for US dollar based investors. The index has seen a return of 2% since 2006, annualized.

2% looks okay for someone today in the US – but in 2006, the 10 year rate was around 4.4%. That means it would have been better for a US investor, in 2006, to have bought 10 year bonds than to have invested in India.

While it may seem like an SIP was better, the SIP return since Jan 2007 was about 1.9% per year. No wonder US investors don’t find it great!

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