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

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A tweet from a Fund Manager

Posted by Muthu on January 23, 2015

Samir Arora (@Iamsamirarora ) is a fund manager based out of Singapore. Once, he was a mutual fund manager in India managing the schemes of Alliance mutual fund. Alliance was subsequently take over by Birla Sunlife. He has tweeted the following today:

“Birla Sun Life Tax Relief 96 (previously Alliance Capital Tax Relief 96) Mutual Fund (yes Mutual Fund) up 101 times since launch on 3/31/96.”

As per Valueresearch, this fund was launched on 29th March 1996 and has given a return of 27.85% since inception. His facts are right. If you’ve invested Rs.1 lakh, 18.8 years ago, on 31.03.96, it’s worth Rs.1.02 crores today.

Since you all do SIP, I want to share the SIP data as well. From April 1996 to January 2015, for 18.8 years, that is 225 months, if you’ve invested Rs.10,000 per month in SIP, you would have totally invested Rs.22.5 lakhs till date. The market value of the same as on date is Rs.3.75 crores. This works out to an annualised return of 23%.

As you are aware, we always take the long term market average of 18% while assuming future returns. We’ve many times explained the logic behind assuming this number. I don’t want to repeat the same now. But as per CRISIL data published last year, actively managed funds as a category has given 22.6% annualised return over last 17.5 years; more than what we assume!

I’ve got many responses for ‘Think Big’ piece. You’ve written that you want to aim for anywhere between Rs.30 crore to Rs.100 crore over next 20 years. We are in a right place in right time. The next 20 years would be better than the last 20 years. All you’ve to do is the stay the course and invest regularly.

We are in a bull market. We do not know yet if it is a secular bull market. Bull markets can last an average of 5 years and secular bull markets can even last 2 decades. Whatever it is corrections and falls would be natural. Markets never go only in one direction. Sharp corrections and bursts are very normal and that is what helps you to get more units as a SIP investor. Don’t forget that. May be I’ll write a piece soon about corrections in bull markets.

Also don’t forget that this 27.85% (102 times multiplier of money) returns given by the Birla Sun Life Tax Relief 96 is also after going through many ups and downs, bull and bear markets, euphoria and despair. Even though your portfolios are doing very well now and you’re bound to make a huge wealth in the long run; never forget the cyclical nature of the markets.

Stay the course.

All the best.

3 Responses to “A tweet from a Fund Manager”

  1. Jayant Fine said

    Sir read your todays post, as i have to do tax savings this year i am depositing Rs50000/- in PPF, but form next financial year i want to do SIP tax saver fund, pl suggest which one will be better, I can invest for 20 years. Jayant

    • Muthu said

      As I’ve repeatedly mentioned in the past, you need to find an IFA (Independent Financial Advisor) or CFP (Certified Financial Planner) in your area. He can only provide you regular consultation and reinforcement you seek. If you want to be a DIY (Do it yourself) investor, valueresearch website and tools would be helpful.

  2. Kumar said

    10k per month in 96 is a huge amount at that time.Think Even middle level managers in MNC’s can’t allocate that much per month in 96. Let’s start we start with 1k in 96 and increase the SIP as per inflation

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