Worked on this table – Sensex vs. BSE 500 vs. a Large Cap mutual fund vs. a balanced fund vs. a mid / small cap fund. Over 16 years of data points. Chosen mutual funds are the top quartile funds in their respective category over the said period. They are not necessarily the ‘Top Funds’.
Some inferences –
Investment made is a Lump sum (one time) on the mentioned date. So, ‘Timing’ is irrelevant, unless the ‘Time’ is, when everyone is selling. Can we buy, then? ?
BSE Sensex gives the lowest returns vs the others ?. Is it a suitable benchmark to track & draw conclusions for an investor? BSE 500 might be more an appropriate benchmark to track.
Mid/Small cap fund wins hands down over others. Short, Medium or Long term; this beats all. But, volatility needs to be checked. Balanced fund is the most consistent. Someone investing on 1 Jan 2015 gets a single digit CAGR. But, the time frame is too small to infer. But, it is also the Most Consistent & Most Ignored category in the long run….and busts a myth that, only equity funds deliver returns. Large cap fund falls in between all these. Neither a high nor a low. In fact it tracks the balanced fund very closely & losing to it in performance during some periods.
A lump sum invested in 2007, 2008 or 2009 – a decent mutual fund still made money for an Indian investor (marked in green, yellow & pink). Indian mutual funds beat Mr. Buffet handsomely in INR, CAGR terms (will have to check for $ adjusted).
And finally, if one can’t choose their own stocks & better a mutual fund; there might be only one option – ‘Invest in a Mutual Fund’. Investor Beware – more than 3000 schemes to choose ?