Mutual Funds: An initial investment of Rs 10,000 in this scheme since its launch would have grown to Rs 1.69 crore. Should you invest?

If you are planning to invest in a Mutual fund scheme, it is recommended to first compare the returns it delivered with those of its peers in recent years.

And if you are told that the returns generated by a plan could have made you richer… ₹One and a half crore or more, you will definitely be more tempted to invest in it.

Unlike a stock, the performance of a mutual fund is judged primarily on the basis of its past performance.

Here we examine the returns delivered by Quantitative multi-asset funda hybrid mutual fund launched by Quant Mutual Fund on April 17, 2001.

As far as the lump sum investment is concerned, the scheme has generated an annualised return of 11.72 per cent. This means that if someone had invested ₹One lakh at the time of the launch of the scheme, the investment would have grown 13 times to reach ₹13.25 lakhs.

Investing through SIP

Meanwhile, exceptionally high returns are often pocketed through systematic investment plans (SIP). These regular investment doses allow investors to purchase a small number of units at different prices, thereby reducing their total cost of acquisition as the doctrine of “Rupee Cost Averaging” applies.

(Source: quantmutual.com; performance as of August 31, 2024)

Invest ₹10K per month

If an investor had invested ₹10,000 per month in Quant Multi Asset Fund over a 12 month period, the investment would have grown to ₹1.41 lakh investing alone ₹1.2 lakh and generated a return of 34.33 per cent per annum.

Similarly, if the SIP of ₹10,000 continued for three years, the investment would have grown to ₹5.31 lakh by allowing an investment of ₹3.6 lakh, which is a return of 27.05 per cent.

Similarly, if someone were investing ₹10,000 steadily for five years, the total corpus would have grown to ₹12.47 lakh by investing only half of this money, i.e. ₹6 lakh, meaning the investment would have grown at an annualized rate of 29.79 per cent.

In seven years, the systematic investment of ₹10,000 would have swelled to ₹21.49 lakh making an investment of ₹8.4 lakh, which is a return of 26.42 per cent.

However, outsized returns are usually observed over a long period of time. This happens in particular because the returns of the early years add to the base, causing the overall corpus to grow faster in later years.

In the case of Quant Multi Asset Fund, if one had been religiously consistent in his investment since the launch (i.e. April 2001), the total corpus would have grown to ₹1.69 crore with an investment of only ₹28.10 lakh spread over the last 23 years.

Note: This story is for information purposes only. Please speak to a SEBI registered investment advisor before taking any investment related decisions.