Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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I want you to be in this 2%. Will you?

Posted by Muthu on October 28, 2014

I was reading an interview of Prashant Jain today.

Prashant Jain is the CIO (Chief Investment Officer) of HDFC Mutual Fund.

You know him through my earlier posts as well.

He is the most respected name in the Indian mutual fund industry.

In the course of the interview he has mentioned that only 2% of the AUM (Assets under management) holding of HDFC Equity Fund is more than 10 years old.

This means only 2% of the current corpus is more than 10 years old.

Since we do not know what percentage (it can be say 0.2% or 20%) of investors hold this 2%, for ease of understanding let me assume that 2% of the investors hold this 2% AUM.

I also take this 2% as a representative sample for all equity funds of HDFC mutual fund.

One of their funds, an ELSS scheme, HDFC Tax Saver has given an annualized return of around 28% over last 19 years.

This means that the invested amount has multiplied by 93 times over last 19 years period.

Rs.1 lakh invested in 1996 would have been worth Rs.93 lakhs in 2014.

All sounds good. But if you look at who benefited by these returns; it is only 2% of the investors.

As Dalbar studies has repeatedly pointed out, investor returns is much lesser than the investment returns.

This is because investors are not disciplined. They fear volatility. They do not have patience. They lack long term orientation.

This 2% who would have made it big are different; they are disciplined, understand that volatility is the basic nature of the market, ignore market noise, have enormous patience and look at long term big picture instead of short term gyrations.

I want you to be in this 2%. Will you?

2 Responses to “I want you to be in this 2%. Will you?”

  1. Shankarraju said

    Hi Muthu,
    Who don’t like tax free annualized returns of 28% OR “93 times in 19 years” 🙂
    Wow on normal average this is 490% tax free every year.

    I am all in …. Thanks for sharing the facts …

  2. kishor said

    A very happy new year to you Muthuji,
    Now all my morning are really fantastic, as i find you refreshing and financially awakening articles.

    Thanks for increasing the frequency of you posts. It really help us to be charged and be on the course without being deviated by day to day noise.

    Regards,
    Kishor

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