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

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Posted by Muthu on March 18, 2017

As a part of year end process, we’ve been reviewing lot of portfolios.

Last 10 years, Sensex has given an annualised return of 9%. The broader market index, BSE 500 has given an annualised return of 10%.

During the same period, your portfolios which are mix of large cap, mid cap and multi cap funds have given a return of around 15%.

Balanced funds during the above period have given around 12% returns.

Surprisingly, MIPs have given around 10% during this period.

Now there are lot of predictions about long term structural bull market for next one or two decades. Since these predictions crop up during every bull market, I do not want to take the same seriously.

Likewise, during bear markets, one of which happened last year, many experts predicted gloom and doom. I never took them seriously as well.

In my view, markets, economy and businesses continue to be cyclical. There would be both surprises and shocks during next 10 years, like it was the same for previous 10 years and the 10 years before and so on.

Though there is no guarantee of returns on mutual funds, as they are marked to market securities, I believe we can aim for 15% returns in equity funds and 12% returns in balanced funds over next one decade.

As far as MIPs are concerned, I’m not sure whether they will produce 10% returns over next 10 years. What I would like to assume is 2% over and above fixed deposits in a tax efficient manner.

The journey would continue to be as volatile as it was before. It is better to be mentally prepared for a bumpy ride. The reward for going through this bumpy ride is good returns over long term.

The returns mentioned in this piece are only a broad pointer and the actual results may vary. The standard disclaimer, past performance may or may not be repeated in future, always apply.

All the best.

One Response to “Returns”

  1. RVS said

    If equity mutual fund return outlook is 15 and balanced funds 12 percent over a decade, there appears to be no justification for balanced funds for long term investment
    One needs to shift to balanced and MIP
    as you get closer to the withdrawal stage
    Please comment

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