I have removed the name of Mutual Fund because message is more important than example. Few observations & questions…
- Fund History & Performance
- This fund was launched in 1994 – 20+ years.
- Investment of Rs 10000 become Rs 4.7 Lakh (47 times) – 21% CAGR
- Do you think this fund outperformed its pears every year? No…
- If you are the one who keep checking fund ratings… you will find this fund in bottom quartile. (Must Read – 6 dumb ways to select mutual funds)
- Do you think journey was smooth?
- When you invest in equity, you get volatility in gift.
- You can clearly see in below chart – fund returns were almost zero in first few years, 20%-30% correction (even 50% in 2008) from top is visible from naked eyes.
- But do you think investors will be complaining?
- Do you think investors enjoyed these returns?
- NO… current investors 6.7 Lakh but only 5000 stayed with the fund since inception.
- I can bet – out of these 5000 investors at least 25% are those who have no clue about this investment. (either they are no more in this world or they lost documents, address change etc)
- Do you think there were no risk in this journey?
- Do you think investor who keep guessing the markets can earn this return?
- Do you think investors who keep hoping from one fund to another can earn this return?
Past performance may or may not be sustained in the future.
Please share your observations, views & questions in comment section.