scorecardresearchMF Returns: If you invested ₹10,000 monthly since its launch, it would

MF Returns: If you invested 10,000 monthly since its launch, it would have swelled to 66 lakh; Check details

Updated: 12 Feb 2023, 10:06 AM IST
TL;DR.

If an investor had invested only 10,000 a month in Kotak emerging equity fund since its launch in Mar 2007, it would have swelled to over 66,52,513 by now. We explain how this happens

The mid cap mutual fund scheme has given a compounded return of 13.51 percent per annum

The mid cap mutual fund scheme has given a compounded return of 13.51 percent per annum

Just as other magics, the magic of compounding must be seen to believe it. If someone tells you that you can accumulate 66 lakh merely by investing a small sum of 10,000 each month in a mutual fund scheme in a span of 15-16 years, it sounds incredible but this is, in fact, true.

Kotak Emerging Equity Fund Scheme, a mid-cap fund, has delivered a compounded return of 13.51 percent per annum since the launch of scheme in March 2007.

Even a lumpsum investment grows handsomely when invested in the right scheme with a high CAGR over a long period. However, the returns are higher when investment is made via systematic investment plans (SIPs) because it offers the rupee cost averaging.  This refers to the averaging out of cost at which mutual fund units are bought.

Here we imagine a situation wherein a small monthly investment of 10,000 is made in a mid-cap fund – Kotak Emerging Equity Fund. And the corpus grows to a reasonably high sum.

Sample this: if you had invested 10,000 for 190 months, you would have accumulated more than 66 lakh by investing only 19 lakh. Here we explain how this takes place and more about the scheme

Scheme details

Kotak Emerging Equity Fund was launched on March 30, 2007. The fund is managed by fund manager Pankaj Tibrewal. The total assets under management (AUM) of the scheme amount are nearly 23,334 crore and the scheme’s benchmark is Nifty midcap 150 TRI.

Tenure (years)               CAGR (%) Corpus (Rs) Investment (Rs)
3                                                       19.874,94,9393.6 lakh
5                                                          12.718,41,2326 lakh
10                                       18.5234,75,96712 lakh
Since Inception (Mar 30, 2007)                               13.5166,38,61419 lakh

(Source: calculated when 10,000 invested in the scheme each month)

As we can see in the table above, if someone had invested 10,000 in the past three years, it would have grown to 4,94,939 by investing only 3.6 lakh. Upon investing the money at the same pace for first five years, the accumulated sum would have grown to 8,41,232 while the investment stands at 6 lakh.

However, in the following five years, corpus grew to 34.75 lakh against an investment of 12 lakh. And finally, the total investment swells to 66.38 lakh if someone had invested a sum of 10,000 each month since the scheme’s launch in Mar 2007. And remember that the total investment made in this case stands at only 19 lakh.

Article
CAGR shows the smoothed returns over a number of years.
First Published: 12 Feb 2023, 10:06 AM IST