In recent years, the term “mutual funds” (MFs) has become increasingly common in the financial market. Advertisements often claim that mutual funds are a safe investment and have the potential to double your money quickly. Mutual funds may be a suitable option to double your investment in ten years.
Mutual funds, especially equity mutual funds, have been generating exceptional returns. Investors see 15% CAGR returns as their investments in international equity schemes increase.
This trend has persisted for the last five years, and experts suggest that if you receive an average return of 15% for ten consecutive years, your investment will double in 10 years.
In August 2024, there was a net investment of Rs.38,239 crore in equity fund schemes, which is 3.3% more than the net inflow of Rs.37,113 crore in July. Furthermore, SIP inflows into MFs have set a record for the 14th consecutive month.
Large-Cap Funds: These funds invest in the shares of large companies listed in the stock market. Investors in significant-cap funds have received an average return of 19% over the past five years.
If this trend continues, the money in these funds will double in the next five years. However, investors should carefully choose the funds that invest in large caps and monitor their status regularly.
Multi-Cap Mutual Fund: These funds invest in all categories of stocks, including large, mid, and small caps. They adjust their portfolio according to changes in market capitalization and have become very attractive, offering an average CAGR of 25%.
Flexi Cap Funds: These funds invest in different stock market sectors in varying ratios, reducing the risk of market bubbles. Fund managers have the freedom to make decisions according to the circumstances. Funds in this category have returned a CAGR of 21% over the last five years.
Contra Funds: Contra funds invest in shares that do not rise much, even in a rising market. They are based on contrarian movements and offer a good risk-reward ratio.
Despite being slightly riskier, Contra funds offer high returns, long-term growth, and portfolio diversification. In the last five years, they have returned an average of 27%.
Multi-Asset Allocation Funds: These funds fall under the category of hybrid funds and should invest in at least three different asset classes, such as equity and debt, and a third asset class, like gold or real estate.
They are characterized by lower risk than most equity and hybrid funds, offering average returns of 19% in the last five years.
This information is for general knowledge only. Investments in mutual funds, the stock market, cryptocurrency, shares, forex, and commodities are subject to market fluctuations. Returns on these investment instruments will vary depending on market conditions.
‘Money Vitta’ does not provide specific investment advice for mutual funds, stocks, cryptocurrency, or any other investment instrument. It is essential to thoroughly research and consider all details before making investment decisions and seek advice from certified financial advisors if needed.