Investors looking for higher returns over conventional savings schemes often bank on non-traditional instruments like mutual funds. These market-linked funds, though volatile in nature, can generate solid returns in the long run.
Compared to individual stocks, mutual funds help diversify asset allocation across a basket of companies to absorb risk. Moreover, they offer a range of options from large-cap to small-cap companies to cater to the risk appetite of different individuals.
These factors make mutual funds an attractive option, particularly from a long-term investment horizon. The investors looking forward to investing in equity instruments without direct exposure to the risk of stock markets often pick mutual funds.
Historical trends have shown that if held onto for a significant period of years, mutual funds have generated more than double returns compared to traditional options like fixed deposits in some cases.
Growth Of Corpus Fund Over 28-Year Investment Horizon In Mutual Fund
For instance, DSP Flexi Cap Mutual Fund is a 28-year-old fund that has given 14.5% annualised returns since its inception in 1997. This means that putting Rs 10,000 every month through a systematic investment plan in this fund would have generated a corpus of Rs 91,84,819 at the current levels, the fund’s website calculator shows.
Fund’s Returns Over Last 10 Years
Based on the fund’s performance, it has given a solid 15.39% annual return in the last 10 years. This means that a Rs 10,000 SIP in this fund since 2015 would have resulted in a corpus value of over Rs 26.86 lakh. Here, the total invested amount stands at Rs 12 lakh.
Fund’s Return Over Last Five Years
Similarly, an SIP of Rs 10,000 in the last five years in this fund would have given an annual return of 16.94%. This means that the total investment of Rs 6 lakh would have turned into Rs 9.16 lakh.
DSP Flexi Cap Fund could be a suitable choice for investors looking forward to investing in a flexi-cap mutual fund. These funds invest in securities of companies across large-cap, mid-cap and small-cap categories without restriction on allocations.
The flexi cap mutual funds are known for offering diversification across companies of all sizes. Investors should evaluate the mutual funds based on factors like expense ratio, exit load and past performance.
. Read more on Personal Finance by NDTV Profit.Historical trends have shown that over a longer duration, most mutual funds generate more than double returns compared to traditional options like FDs. Read MorePersonal Finance
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