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Business News/ Money / Personal Finance/  Magic of compounding: Investing 1 lakh would have grown to 8 lakh in this mutual fund in 10 years
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Magic of compounding: Investing ₹1 lakh would have grown to ₹8 lakh in this mutual fund in 10 years

An investment of ₹1 lakh in Quant Active Fund would have grown to ₹8 lakh in ten years’ time. A similar amount of investment in Invesco India Multicap Fund would have fetched a return of ₹5.40 lakh in 10 years

Multi-cap funds invest a minimum of 75 percent in equity & equity-related instrumentsPremium
Multi-cap funds invest a minimum of 75 percent in equity & equity-related instruments

The power of compounding is so profound that it is often referred to as magic. From mutual fund brokers to Warren Buffett – all tend to laud its power.

Albert Einstein once famously said that compound interest is the eighth wonder of the world. More than 100 years later, this is still believed to be a timeless doctrine. The concept is simple: When you accumulate money on a consistent basis, the pace of wealth generation accelerates as the time rolls on.

When you invest small amounts on a regular basis, the wealth generation is sluggish in the initial stages, but as the wealth grows in size, the pace becomes faster and faster.

Here we give the lowdown on top performing multi cap mutual funds which have given over 17 percent annualised return in the past 10 years.

What are multi cap funds?

Multi-cap funds are mutual funds which invest a minimum of 75 percent in equity & equity-related instruments. They invest across stocks of different sectors and segments of the market.

There are four multi cap schemes which have given over 17 percent CAGR return in the past 10 years. These include Quant Active Fund and ICICI Prudential Multicap Fund.

Multi cap funds                              10-year-return (%) After 10 years, one lakh becomes
Quant Active Fund                                      23.18    8.04 lakh
Invesco India Multicap Fund                    18.37    5.40 lakh
Nippon India Multi Cap Fund            17.29    4.92 lakh
ICICI Prudential Multicap Fund                     17.12                4.85 lakh

(Source: AMFI, data as on Dec 22, 2023)

As one can see in the table above, an investment of one lakh in Quant Active Fund would have grown to 8 lakh in ten years’ time. A similar amount of investment in Invesco India Multicap Fund would have fetched a return of 5.40 lakh in 10 years.

Nippon India Multi Cap Fund would have given a return of 4.92 lakh by investing one lakh during 10 years. Investing one lakh in ICICI Prudential Multicap Fund would have swelled to 4.85 lakh.

Quant Active Fund

As one can discern that the top performing multi cap fund is Quant Active Fund which gave a CAGR of 23.18 percent in the past 10 years. The table below shows the amount of return one would have received upon investing one lakh in this scheme.

Tenure               1 lakh grows to…
1 year                       1.23 lakh
3 years                      1.86 lakh
5 years                    2.83 lakh
10 years                    8.04 lakh

(CAGR for 10 years [23.18%] is kept same across tenures)

This means if someone had invested 1 lakh in this scheme one year ago, it would have swelled to 1.23 lakh. And in three years, this would have grown to 1.86 lakh. In five years, this sum would have grown to 2.83 lakh.

In ten years, an investment of 1 lakh would have grown to 8.04 lakh, as the table above shows.

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Published: 25 Dec 2023, 11:18 AM IST
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