Reproduced as posted on my Twitter ID:
A few months back, an interesting news played out in the Indian #mutualfund industry. One of the oldest funds @NipponIndiaMF, went around town claiming (rightly so) how their flagship fund Nippon Growth Fund (erstwhile Reliance Growth Fund) had delivered stellar returns:
Launched in Oct 95, the fund crossed the 2000/- NAV mark thus delivering a 200X absolute return (20000% sounds better) … which translated to an enviable CAGR of ~23% … but that’s not where the story ends …
Today (17-Sep-2024) when I rehash this post again after around 29 months, the latest NAV of the fund has crossed an astounding 4187/-
My mentor, peer, and sharp as a tack @amarpandit74 made an astute observation. Over an email and a blog post later, he asked Nippon a pertinent question, “While the fund has delivered a 200X performance, how many investors have truly got this (kind of returns)?”
The team at Nippon after some frantic number-crunching came up with the answer to the question. The answer was more dismal than Amar’s “1% investors” prediction. Published in this aptly titled @livemint article: “The Missing MF Millionaires”
” … only 2,600 investors have stayed with the fund since inception and their AUM is a mere ₹5 lakh. In other words, this cohort of patient investors would have invested just ₹2,415 on average at the time when this fund was launched.”
This was like the Indian case study validation of what @behaviorgap has been trying to preach, for the better part of the last decade.
A simple yet not so obvious point he makes is this:
That brings me to the second point of this long post. That is:
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