Before investing in a mutual fund scheme, retail investors tend to compare the returns given by one scheme vis-à-vis other schemes in the same category in order to maximise their wealth creation.
Although historical returns are no guarantee of any scheme’s future returns, still investors prioritise them over an interplay of several factors such as the reputation of fund house, macroeconomic factors and the category of scheme.
Returns for a year may not matter much, but when compounding comes into play, the returns over a number of years increase substantially. As they say ‘proof of the pudding is in the eating’. So, we demonstrate the power of compounding by examining the returns delivered by flexi cap funds over a 10-year-period.
Here, we assess the returns delivered by flexi-cap mutual funds in the past 10 years and see how the investment sum appreciates in a 10-year period when the compound annual growth rate (CAGR) returns are over 16 percent.
Flexi cap funds | 10-year-returns (%) | ₹one lakh becomes (Rs) |
Quant Flexi Cap Fund | 23.85 | 8.49 |
Parag Parikh Flexi Cap Fund | 19.56 | 5.96 |
JM Flexicap Fund | 19.47 | 5.92 |
Franklin India Flexi Cap Fund | 17.29 | 4.92 |
HDFC Flexi Cap Fund | 17.44 | 4.99 |
Aditya Birla Sun Life Flexi Cap Fund | 16.90 | 4.76 |
SBI Flexicap Fund | 16.75 | 4.70 |
DSP Flexi Cap Fund | 16.52 | 4.61 |
(Source: AMFI, returns as on May 21, 2024)
As we can see in the table above, the annualised returns given by flexi cap funds hover in the range of 16-23 percent. The highest returns of 23.85 percent were given by Quant Flexi Cap fund. This means if someone had invested ₹one lakh 10 years ago, it would have grown to ₹8.49 lakh.
Investment in other schemes would have swelled to ₹5.92 lakh (Parag Parikh flexi cap), ₹5.96 (JM Flexi Cap), ₹4.92 (Franklin India Flexi cap) and ₹4.99 lakh (HDFC Flexi cap).
On the other extreme, the lowest returns (among the top performing schemes only) of 16.52 percent were delivered by DSP Flexi Cap Fund. This means an investment of ₹one lakh would have grown to ₹4.61 lakh.
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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