Mutual Funds: An SIP of ₹10K in this scheme since launch would have grown to ₹1.69 crore. Should you invest? | Mint

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 the past few years.

And if you are told that the returns rolled out by one scheme could have made you richer by ₹one crore and a half, or more, you will definitely be more tempted to invest into it.

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

Here we examine the returns delivered byQuant Multi Asset Fund, a hybrid mutual fund launched by Quant Mutual Fund on April 17, 2001.

As far as lumpsum investment is concerned, the scheme has delivered an annualised return of 11.72 percent. This means if someone had invested ₹one lakh at the time of the scheme’s launch, the investment would have grown 13 times to reach ₹13.25 lakh.

Investing via SIPs

The exceptionally high returns, meanwhile, are typically pocketed viasystematic investment plans (SIPs). These regular doses of investment enable the investors to buy a tiny number of units at different price points, thus bringing down their total cost of acquisition as the doctrine of ‘rupee cost averaging’ kicks in.

(Source: quantmutual.com; returns as on Aug 31, 2024)

Investing ₹10K a month

If an investor had invested ₹10,000 a month in Quant Multi Asset Fund for a period of 12 months, the investment would have grown to ₹1.41 lakh by investing only ₹1.2 lakh and delivered a return of 34.33 percent a year.

Likewise, 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, thus delivering a return of 27.05 percent.

Similarly, if someone were investing ₹10,000 consistently for five years, the total corpus would have grown to ₹12.47 lakh by investing only half of this money i.e., ₹6 lakh, which means the investment would have grown at an annualised rate of 29.79 percent.

In seven years, the systematic investment of ₹10,000 would have swelled to ₹21.49 lakh by making an investment of ₹8.4 lakh, thus delivering a return of 26.42 percent.

However, the gigantic returns are typically witnessed over a long period of time. This particularly happens because the returns in the first few years get added to the base, thus making the overall corpus grow faster in the later years.

In case of Quant Multi Asset Fund, if someone were religiously consistent in their 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 across the past 23 years.

Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.