Equity Mutual funds performance CAGR in the last 20 years | Past performance of Mutual fundsUncategorizedEquity Mutual funds performance CAGR in the last 20 years | Past performance of Mutual funds

Equity Mutual funds performance CAGR in the last 20 years | Past performance of Mutual funds

You might have read that you should invest in mutual funds for the long term. Have you ever wanted to test the reality of this statement? In this article, we will find out how mutual funds have performed in the last 20 years in India.

Let me start with the example of one of India’s most popular mutual funds, HDFC Top 100 (earlier HDFC Top 200). Shubham Mehta started a modest SIP of ₹5,000 per month in this fund 20 years ago. Mr. Mehta’s small monthly investment has grown to a massive ₹1.24 crore today. Ever dreamt of becoming a crorepati from a total investment of just ₹12 lakh spread over 20 years? And what if I told you that HDFC Top 100 is even the best performing mutual fund over this period? Sounds unbelievable? Read on to find out.

Some of the oldest mutual funds in India have made its investors millionaires. While some old funds have not performed this well, there are many funds which have given more than 20% returns(CAGR 20%+) since their inception 20-25 years ago. This is against NIFTY Index returns of 12% during the same period. During the last 20 years, we have also witnessed market crashes like the Dot Com Bubble and the Global Recession. These stellar mutual fund returns have come even after facing such hostile market events.

The world’s most famous investor Warren Buffett quoted “Someone is sitting in the shade today because someone planted a tree a long time ago.” This is truly the case with equity mutual funds. The longer you stay invested, the better your chances of getting high return on your investment. Also SIP investment in equity mutual funds is a brilliant method to build wealth in the long run.

In this article, we will look at some of the famous mutual funds which have existed for more than 20 years. To name a few, we will look at Franklin India Prima Fund, HDFC Top 100 Fund (earlier HDFC Top 200 Fund), Aditya Birla Sun Life Tax Relief 96 and Franklin India Bluechip Fund.

Benefits of SIP and Long-term investing

SIP, the short form of Systematic investment plan is the best method for long term investment and wealth building. They have generated outstanding returns for investors and thus built wealth. The major benefits of SIPs for investors are

  1. Bring Discipline into investing: Since the SIP amount is deducted automatically from your bank account every month, SIP brings out the much-required discipline in investing.
  2. Prevent the problem of Market Timing: Since SIP gets you more units when markets are down, they lower the average cost of investing. This brings higher returns in the long term.
  3. Flexibility – You can stop, pause, change the amount and withdraw any amount from a SIP.

Table of CAGR of Mutual Funds performance in the last 20 years

In the following table, we will see how an SIP of ₹5,000 per month over last 20 years would have performed in different mutual funds. We would be looking at a total investment of ₹12 lakh over 20 years.

Mutual Fund Scheme NameFund Inception/Start DateAUM (Rs Cr)Returns for last 20 years (%)*Worth of Rs 5,000 SIP since the last 20 years (Rs)**Advice/Recommendation
Franklin India Prima FundNovember 30, 19936,602 Cr25.65%1.89 CrInvest
Reliance Growth FundOctober 8, 19956,873 Cr25.16%1.72 CrInvest
Aditya Birla Sun Life Tax Relief 96 FundMarch 29, 19966,102 Cr24.20%1.22 CrInvest
Reliance Vision FundOctober 7, 19953,199 Cr21.15%1.18 CrInvest
HDFC Top 100 FundOctober 11, 199614,789 Cr20.65%1.24 CrInvest
DSP Black Rock Equity FundApril 5, 19972,595 Cr20.42%1.19 CrInvest

*These returns are point to point (lumpsum) returns

Stretching the point even further, an SIP investment of ₹5,000 per month (₹14.80 lakh total) in Franklin India Prima Fund made since its inception in 1993 is worth ₹3.89 crores now!

It is important to note that past returns may repeat in the future. Still, long and medium-term performance is a good way to judge the performance capability of a fund. You could use these returns along with other indicators to decide where to invest. If you need help, please feel free to contact a good financial advisor for investment advice.

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