It might be fashionable to say that something is overhyped. But if one takes a closer look the numbers, the truth will be apparent.
Many Mutual Funds have given good returns compared to any other instrument, even the index. Here is a view of the rolling 5 year returns of Multicap funds vs the benchmark index of Nifty 500.
Let us look at one fund in detail, this time vs the Nifty 50 : Axis Blue Chip Fund (there are many which did even better):
Over a five year period, this fund has given about 15% returns vs Nifty which has given about 11% (as of date). I can repeat this with other funds too, but the basic point is that:
- Good equity funds have over time done better than other options. Index funds are good too, but the Indian market has room for ‘good alpha’ for several years more.
- Most people do not have the time to invest in specific stocks.
- Direct plan funds do better than regular plans and you get about 30% to 40% more in the long run.
Bottomline:
Invest in good direct plan equity mutual funds via systematic plans and let compounding take care of the rest for you. These are time tested truths, like eating healthy food and getting daily exercise.
Happy Investing! In case you are already invested, consider switching to direct plans to get more out of your hard earned money.
