📈 Equities Outperform Traditional Assets in Sri Lanka

A 5-year analysis ending December 2025 highlights the superior wealth creation potential of equities over fixed income and real estate in the local market. • Market Performance The Colombo Stock Exchange (CSE) ASPI recorded a 5-year CAGR of ~27.28%. Capital invested at end-2020 more than tripled by end-2025. Annual gains: 41.89% (2025), 25.5% (2024), and 49.66% (2023). • Comparative Returns Fixed Income: T-bills and bank deposits averaged ~10% annually, often yielding negative real returns when adjusted for inflation and taxes. Real Estate: Hampered by high transaction costs (8–10%), low liquidity, and rental yields rarely exceeding mid-single digits. Gold: Underperformed productive assets over full cycles; globally, equities (8.1%) outpaced gold (6.7%) from 1990–2025. • Sector & Unit Trust Insights Diversified equity unit trusts saw 5-year CAGRs exceeding 20%. Balanced funds underperformed pure equities due to fixed-income "drag." Equity growth is driven by corporate earnings reinvestment and valuation normalization post-economic crisis. • Key Takeaway While fixed income is essential for liquidity, long-term wealth accumulation in Sri Lanka is most effectively achieved through equities, benefiting from compounding and business growth.