The house always wins: Stock exchanges consistently beat their benchmarks worldwide

Global exchanges beat benchmarks.

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26 Aug, 2025 12:21

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Gamblers can get lucky once, twice, or three times, but in the end, the house always wins.

Global stock exchanges have seen long-term outperformance over the past two decades, with most bourses giving investors significantly higher returns than their domestic benchmark indices.

Leading the pack, Hong Kong Exchanges, Japan Exchange Group, Singapore Exchange, and NZX posted exceptional cumulative gains ranging from 1,100 percent to nearly 2,800 percent (in absolute terms) over the past 20 years. Even more mature markets such as the CME Group, Nasdaq, and the London Stock Exchange showed strong excess returns compared to their indices.

Not just global markets, but even in India, since its listing, shares of BSE have outperformed its frontline 30-share Sensex index. Since Asia's oldest bourse listed in 2017, it doesn't have a 20-year demonstrated track record to rival global peers. However, since its debut, it has given investors far superior returns as against Sensex.

In a note, Horizon Kinetics LLC, a U.S.-based asset management firm, said that the securities exchange model is so powerful that nearly every exchange with a 20-year public track record has outperformed its respective regional stock index, in most cases by a wide margin. It’s a global phenomenon: the U.S., Japan, Hong Kong, the UK, Singapore.

“Securities Exchanges [are] venues where transactions take place, they sit, like a croupier at a casino, atop the market action, ultimately indifferent to the fashions and tempests of the moment. All the while, they collect their spreads and benefit from periodic volatility as well as long-term rising volumes,” the note added.

According to the investment advisory, a key feature of securities exchanges is their “inherent adaptability,” indicating the ability to grow with - not despite - new disruptive assets;

“they have about the greatest longevity of any publicly traded business in the world.”

As a result, in an ironical fashion, Horizon Kinetics LLC said that even investors who prefer lesser churn in their portfolios tend to have a solid allocation towards exchanges, whose business models usually depend entirely on monetizing the financial markets’ ever-increasing turnover and trading.