People who have been investing in Mutual Funds for 10+ years, what has been your annualised returns % on original investments?

[jennifermartin]

Revisiting this post here as it was inconclusive. The OP was right. Instead of giving theoretical returns, people could quote their returns in the MFs for the last decade.

For the people, who have been investing since the last decade, you must have invested in both MF & FDs. Comparing the two, which gave you better post tax returns?

For me, I invested 1L in an FD in 2019 which will give me 40K in 2024. Post tax returns have been around 4.8% which would reduce if I enter 30% tax bracket. At the same time, I invested 50K lumpsum in an ELSS which gave me around 83.5K this October tax free which is around 11.5% annualised returns.The OP in the original post says that he would get 10% return in FD but 10% in FD is a thing of the past. The max Banks are giving today is between 6-8%. Even if it is 8%, with 20% tax bracket, it comes down to 6.4% & I am hopeful, MFs would beat this in a period of 5+ years

I have invested only for max for 3 years which doesn't count in market. Hence asking to share your experiences from the last decade.

Edit - Some freefincal articles about unpredictability of market returns -

https://freefincal.com/15-year-nifty-sip-returns-crash/

https://freefincal.com/nifty-sip-returns/

 

[dallasdude101]

@jennifermartin This is my 12th year of MF investing. My current annualised return is ~ 16%. Vast majority of my investments have been in equity MF via SIP & direct investment.

 

[jennifermartin]

@dallasdude101 Thanks for sharing.

How did you manage your investments in Active MFs? As in, I am a passive investor as I don't have time to select MFs or rebalance them. Were you lucky with funds selection or sip timings? Any thoughts you want to share?

 

[dallasdude101]

@jennifermartin Timing:
I don’t think I was particularly lucky with timing. I just kept doing SIPs regardless of what was happening in the market or what my returns were

Selecting Active funds:
I would read a lot and use value research to pick funds. Picked some good ones, some ok one and some bad ones. I would monitor a fund for 2-3 years. If it was consistently in the top quartile of its category I would keep it. If it was not I would get out of it.

Current situation:
Having tried various kinds of funds I have come to a place where I have greatly simplified my portfolio. I now only have categories and funds that have shown consistent returns (for me and broadly over the past 10/20 years) and just decided to ignore everything else. Currently my allocation is:
- Index funds: 40%
- ELSS + Flexi cap: 30%
- Small cap + International: 30%

Future plan:
I want to see how my non-index funds do over the next 3-5 years. If they provide better returns then I’ll keep them else I might shift mainly to index funds.

Annualised returns:
I am attaching a picture to show what my annualised return was at the end of each year of my journey (31st March). The current year (year 12) is the return as of today. Bulk of my investments (90%) happened between years 4 and 10. Also the near 0% return at the end of Year 9 was of course due to the massive covid crash. Was scary but I kept my faith and the portfolio recovered pretty quickly

annualised returns for each year over 12 years

 

[jennifermartin]

@dallasdude101

now only have categories and funds that have shown consistent returns (for me and broadly over the past 10/20 years)

This is not asking for MF recommendation but since you have seen the last decade in MFs, can you mention your MFs which have been consistent performers for you?

My allocation is -

Nifty 50 index - 64%

S&P index - 9%

Flexi - 9%

Midcap - 9%

ELSS - 9%

 

[dallasdude101]

@jennifermartin Dangerous terrain friend but I’ll answer with usual caveats of what worked for me might not work for you and past is not prediction for future.

I used to have 10-15 funds. A few years ago I brought it down to six, 2 each in the 3 categories I mentioned in my earlier message.

Out of these 6 current funds only 2 funds I have held for 5+ years. They are:
- Nippon small cap
- Mirae ELSS

They fit my criteria when I first picked them. They might not be the best now but they are good enough so I keep them going and plan to do so unless something changes drastically.

Also, I have never shared on this forum before but responded to your question as I had many similar questions when I started 12+ years ago. I also wanted someone who was a few years ahead of me to share their actual journey. Didn’t find many when I was looking. So decided to share incase it might give some perspective to those earlier in their journey.

 

[jennifermartin]

@dallasdude101 I have some more Questions Sir, if you have time to answer them.

I am going for index as I don't know how to pick active funds As past performance is not an indicator of their future performance

So, could you advise how to pick funds? And why do you think my investing in index for 74% is a dangerous terrain?

 

[dallasdude101]

@jennifermartin Sorry if I was unclear: dangerous terrain comment was not for you investing 74% in index funds. It was for you asking me for MF recommendations which is always a dangerous thing for anyone to suggest to someone else.

Here is how I pick funds:
1. I first decide what my portfolio will be. This is the mix of categories I want. Eg: Index funds are the foundation & they make 40% of my portfolio. Small caps are for taking risks and they make 15-20% of my portfolio.
2. Then for each category I decide how many funds I want. Overtime I have learnt to keep it to 1-2 funds per category
3. Then for each category I select the funds. The main criteria I use: should be well rated by Value research, should have been in the top quartile of its category for most of last 5 years, should have a low expense ratio. Some other criteria I glance at: risk measures/grade, fund style, returns compared to benchmark index
4. Then I setup a SIP (I never lump sum into anything)
5. Then I observe it for at-least 2/3 years. If it performs as I expected (based on the role I wanted it to play in my portfolio) & keeps meeting my criteria then I keep it else I get out of it (usually by doing a STP)

That’s it. It’s a process I have built over the years based on reading and experience.

Works good enough for me and as my portfolio stabilises I find myself not having to pick many funds frequently.

Hope this was clear and helpful.

 

[jesusownsmyheart]

@dallasdude101 Quick question, have you ever used/ considered using crisil instead of value research for mf ratings?

 

[dallasdude101]

@jesusownsmyheart Haven’t tried it. Have you?
Any difference?

 

[jennifermartin]

@dallasdude101

should have been in the top quartile of its category for most of last 5 years,

By this, you mean it's last 5 year returns should come in the top ? Say in the top 5 MFs?

Because otherwise no platform provides the date Quarter wise which MF is doing good in each category

 

[dallasdude101]

@jennifermartin Not too 5 but top quartile in its category (top 25% of all funds in its category).
Value research shows this for various durations (quarters, years) and scenarios (lump sum, SIP)

 

[dieseldoor]

@dallasdude101 wow, thanks for this, didn't know about STP

so how does STP work actually, whats it benefit, does it mean since fund is directly transferred, there is no taxation?

 

[jennifermartin]

@dallasdude101 This was very helpful. Thank you

I guess I am already following some of the fundamental principles from your strategy. Will work on them to see what suits me. Thanks a lot for your time.

 

[dallasdude101]

@jennifermartin Great. Best of luck with it.

 

[contemplativekingdoms]

@dallasdude101 I’m saving this comment as a guide. Thanks man

 

[dallasdude101]

@contemplativekingdoms You are welcome

 

[angelinheaven]

@jennifermartin Could you pls explain what Flexi, Midcap and ELSS are?