Mutual Funds: Investing ₹1 lakh in this mid cap fund at its launch would have grown to ₹11 lakh now

Mutual Funds: If you stay invested in a mutual fund for a long period, the initial investment can grow multi-fold. The rate of return in the later years tends to deliver higher returns because the return in the first few years gets added to the principal, thus allowing it to grow at a faster pace.

This phenomenon is known as compounding, which is lauded several times by the likes of Warren Buffett. Wealth advisors also often assert that investors should stay invested over a long period to meet financial goals.

Here we randomly handpick one mutual fund scheme (Kotak Mid Cap Fund-Direct) to demonstrate the power of compounding.

We assume that if someone had invested ₹one lakh a few years ago, then how much would this have grown over the years?

If the investment of ₹one lakh were made one year ago, the investment would have been more or less the same. Additionally, if the same investment ( ₹1 lakh) were made three years ago, the corpus would have grown to ₹1.86 lakh by growing at a rate of 23.16 percent a year.

Additionally, if someone had invested the same amount of ₹one lakh five years ago, the investment would have grown to ₹3.72 lakh with a 30 percent rate of return.

(Source: kotakmf.com; As on 31 Aug 2025)

As we can see in the table above, if someone had invested ₹one lakh 10 years ago, the investment would have grown to ₹6.04 lakh by appreciating at a rate of 19.72 percent.

Finally, if a retail investor had invested the money at the time of the scheme's inception (1 Jan 2013), it would have delivered an annualised return of 21.13 percent, thus allowing the investment to become ₹11.48 lakh by now.

More about Kotak Mid Cap

This mid cap fund has an AUM of ₹56,988 crore. The scheme's expense ratio is 0.37 percent as of 31 August 2025. Its benchmark index is Nifty Midcap 150TRI. The minimum amount that one should invest in this scheme is ₹100 and any amount thereafter, per the information shared on Kotak Mutual Fund's website.

Among its assets, around 69.16 percent are invested in mid cap stocks, 14.66 percent in small caps, 14.06 percent in large cap, and 2.12 percent in debt & money market funds.

Its sectoral allocations are IT-software (10.91%), consumer durables (8.33%), finance (7.84%), retailing (7.74%), auto components (7.67%), healthcare services (7.38%), chemicals & petrochemicals (5.4%), and electrical equipment (5.05%).

Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.

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