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personal finance | IST

Money Money Money: Here’s a look at funds that have been giving 50x returns

Mini

here is an interesting analysis of funds that have given multi-bagger returns over the past many years.

The Indian equity markets have been through a phase of correction. Investors are concerned about an economic slowdown and selling by foreign investors. But even in this environment of gloom, here is an interesting analysis of funds that have given multi-bagger returns over the past many years. The power of compounding is at play in the right sort of mutual funds.
Says Kshitiz Mahajan, Co-Founder of Complete Circle Consultants: “I was going through the funds which have been existing for the last 20-25 years. And I have come across 10 funds of which 9 have generated more than 50 times return and one fund has generated 100 times return. This means Rs 1 invested over last 23-24 years has become Rs 100. It is only 24 years but Rs 1 has become Rs 100. So, it is just the power of compounding.”
Mahajan pointed out that in equity investments, the returns are not going to come in a linear way. "If you are saying that there is an 18-20 percent compounding, every year it will not give 18 percent.  Suppose 10 years back your conviction was IT sector. If you were on the right cycle of IT sector and not at the peak, then chances for you to get this type of return are more,” he added.
Speaking about evaluating a fund's under-performance, Mahajan said: “We give four to five quarters to a fund because sometimes it happens that the fund managers' call might go wrong, maybe the companies he is investing into are doing good in terms of the prospects, in terms of valuation, in terms of numbers, but the market is not giving them their due.”