Achieving a consistent 15-20% annual return is the aspiration of many an investor. Yet, it’s essential to understand that mutual funds, by nature, are subject to market risks, and past performance doesn’t guarantee future returns. With that said, let’s discuss some general principles and options:
- Diversification Matters: Before zeroing in on specific funds, consider spreading your investments across various categories. This will provide a safety net and better returns during market fluctuations.
- Equity Large Cap Funds: Large-cap funds primarily invest in stocks of big companies with a solid market reputation. Because these companies have an established presence, they often provide stable and consistent returns, though they might slightly lag behind in very bullish markets.
- Equity Mid and Small Cap Funds: These funds invest in medium and smaller companies, respectively. While they can offer phenomenal returns in bullish markets, they might be more volatile compared to large-cap funds.
- Equity Multi-cap Funds: A blend of the above two, multi-cap funds invest across company sizes, balancing risk and reward.
Now, for the specifics (its easy to cite a fund but it will be my moral responsibility to ask you exit when the time comes; without a direct advisory relationship that would be difficult ):
- Fund A (Large Cap): This hypothetical fund has historically delivered consistent returns, underpinned by a strong portfolio comprising top Indian companies. Remember, while large caps are relatively stable, they might not always hit the 15-20% mark, especially in subdued markets.
- Fund B (Mid/Small Cap): For those willing to shoulder a bit more risk, this hypothetical fund focuses on emerging stars in the Indian corporate world. Over the past few years, it has managed to deliver returns nearing your target, but it’s essential to brace for possible volatility.
- Fund C (Multi-Cap): Striking a balance between the first two, this fund aims to capture growth across the market spectrum. It’s anchored in both stability (via large caps) and growth (via mid/small caps).
Remember the words of the legendary investor, Warren Buffett: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Choose funds that invest in companies with strong fundamentals, transparent operations, and visionary management.
To sum up, while aiming for 15-20% returns is laudable, always consider the risks associated with your investment choices. Engaging with a SEBI Registered Investment Advisor can provide insights tailored to your financial situation. And, if you’re scouting for an ally in this journey, Jama Wealth’s portfolio management services and associate investment advisory services might be what you need.
