Long-term Sources of Investment Returns

  • U.S. equities have generated a total return of 8.9% p.a. over the last 130 years.

  • During this period, there were extended periods when real investment returns were negative.

  • This return is comprised of four components, namely multiple expansion, inflation, real earnings growth, and dividends.

  • Multiple expansion over the long-term is small enough that it can be ignored as a source of investment return.

  • Over the long-term, price appreciation returns earned from investing in equities, i.e., returns excluding dividends, approximately equals business value growth.

  • A simple process that successfully identifies businesses that have the sustainable ability to grow their business values at above average rates will generate superior investment returns.

Baijnath Ramraika

About The Author

Baijnath Ramraika, 36, is an MBA from the Darden Graduate School of Business, University of Virginia, is a CFA charter holder, and is also a Chartered Accountant from The Institute of Chartered Accountants of India. Baijnath is a partner at Multi-Act Equiglobe (MAEG) and is a Sr. Portfolio Manager at Multi-Act.

Discover a better way of investing

Know why our clients believe that we help them to not only preserve their valuable capital but also generate more than adequate risk-adjusted returns.

Your Name (required)

Your Email (required)


reCaptcha (required)

Leave a Reply

19 − six =

Portfolio Management Services (SEBI Registration No. INP000002965) are offered through Multi-Act Equity Consultancy Private Limited (CIN: U67120PN1993PTC074692), which is a wholly-owned subsidiary of Multi-Act Trade and Investments Private Limited; Investment Advisory Services (SEBI Registration No. INA000008589) are offered through Multi-Act Trade and Investments Private Limited (CIN: U65920MH1997PTC109513).