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Why my overall returns from Mutual Funds is less than my current FD rates(6%)?

Why my overall returns from Mutual Funds is less than my current FD rates(6%)?

This is the question i get today from most of my mutual fund clients.To clarify this i take one investor who has invested in L&T Hybrid Equity fund ,which is an balanced fund(in old context to keep it simple) which invests 65-75% in direct equity(stocks) and 35-25% in Fixed income products like Bonds,NCD,Gilts etc from year 2015.


you can see first 18 investments from oct'15 till Dec'16 he has got more than 8% annualized returns in all cases that is  invested above 800 days


Let us see what happend after this

you can see investments made 1 year(365 days) before till 799 days he has got less than +8% to -4% varies.


Let us take the overall investment how it looks like

His overall investment has given +3.5% returns which is less than the current FD interest rates (6%). Sounds right? No. It is not true. 

Observation 1

Out of overall 57 installments made from Oct'15 to till date (mar'19) only first 18 installments given above +8% annualized returns that is invested above 800 days

Observation 2

Out of overall 57 installments made from Oct'15 to till date (mar'19) last 39 installments given less than +8% to -4% varies that is invested less than 800 days

Observation 3

Considering observation 1 &2 the overall investment return +3.5% didn't paint the true story. Isn't it? So you can't make right decision (With drawl/Stop SIP/Switch to other scheme).Hope you are clear now

 

Conclusion 

So if you stay invested in this fund based of last 4 year history ,for more than 800 days for each SIP installment you can expect more than +8% returns which is +2% excess in existing FD rates(6%) that too taking only 65-75% direct equity or stocks exposure.