The Gap Between Investor Returns & Investment Returns

Many investors claim that the returns they receive do not correspond to those represented by fund companies or even numerous mutual fund rating agencies. This disparity in returns irritates investors. As such, this article will help you understand why there is a gap and how to fix it

Equity mutual funds have evolved as a formidable investing alternative during the last decade or so. A study of the 10-year returns of several fund categories demonstrates this concept.

As of July 19, 2022, the 10-year category median returns for open-ended mutual funds, including large-cap, large and mid-cap, mid-cap, small-cap, flexi-cap and multi-cap funds are 13.35 per cent, 14.61 per cent, 18.19 per cent, 17.73 per cent, 14.43 per cent, and 14.53 per cent, respectively. This makes it

clear that over the long run, equity mutual funds outperform debt funds and other fixed income investments by a significant margin. The assets have soared as a result of this parallel phenomenon. Open-ended equity fund assets were worth ₹1.8 lakh crore in June 2012, but they were worth ₹12.86 lakh crore in June 2022, representing a 21.73 percent annualised increase.

Furthermore, figures from the Association of Mutual Funds in India (AMFI) for the previous three years suggest encouraging growth. The monthly SIP flows increased from ₹7,917 crore in June 2021 to ₹12,276 crore in June 2022, representing an annualised rise of 15.74 per cent. However, a large number of investors think that their returns do not correspond to those claimed by the asset management companies or even other mutual fund rating agencies. This disparity in returns frustrates investors and leads them to conclude that mutual funds are not for them.