Before deciding to invest in a Mutual fund scheme, it is advisable to monitor its performance over a long period of time, for example since its launch.
And remember when money remains invested in one mutual fund scheme Over time, returns in later years are disproportionately higher than those in earlier years.
As a result, the total investment is multiplied over a long period of time. This is known as compound of returns.
Here we demonstrate the magic of compounding by showing the returns provided by a mutual fund scheme i.e. ICICI Prudential Multi-Asset Fund.
Tenure | Return (%) | ₹1 lakh becomes (Rs) |
1 year | 29.74 | 1,29,830 |
3 years | 23.37 | 1,87,980 |
5 years | 21.63 | 2.66.430 |
10 years | 15.09 | 4.07.733 |
Beginning | 21.56 | 70,02,150 |
(Source:icicipruamc.com, results as of August 16, 2024)
As you can see from the table above, if someone had invested ₹One lakh in this mutual fund scheme, would have increased to ₹1.29 lakh, which is a return of 29.74 per cent.
And if the investment of ₹If one lakh had remained invested in the scheme for 3 years, it would have grown to ₹1.87 lakhs.
In five years, the investment of ₹One lakh would have shot at ₹2.66 lakh, giving a yield of 21.63 per cent.
For more than a decade, an investment of ₹One lakh would have grown to ₹4.07 lakh. And if someone had made an investment of ₹one lakh at the time of launch of the mutual fund i.e. on 31st October 2002, the investment would have grown to a huge sum ₹70 lakh, which is a return of 21.56 per cent.
Other details
It is an open-ended scheme launched on 31st October 2002 which invests in equity, debt and exchange traded commodity derivatives/Gold ETF units/Silver ETF units/REIT & InvIT units/Preference shares.
The plan’s assets under management (AUM) amount to ₹46,488 crore, according to icicipruamc.com.
Key stocks comprising the plan include ICICI Bank (4.95%), HDFC Bank (4.61%), NTPC (4.2%), Maruti Suzuki (3.84%), RIL (3.03%), Information systems (2.46%), SBI Cards (2.42%), Bajaj Finserv (2.3%) and Sun Pharmacy (2.29%).
The fund managers of the scheme are Manish Banthia, Sankaran Naren, Ihab Dalwai, Sri Sharma, Gaurav Chikane and Akhil Kakkar.
Meanwhile, it is critical to remember that a mutual fund’s historical returns are not reflective of future returns. In other words, a fund’s past performance is no guarantee of its future performance.
Therefore, it is important for investors to judge the potential of a scheme based on an interplay of several factors such as the category to which it belongs, the reputation of the fund manager, the past performance of the fund managers and, crucially, macroeconomic factors.
Note:This story is for information purposes only. Please speak to a SEBI registered investment advisor before taking any investment related decisions.
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