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Stop Chasing Past Mutual Fund Returns…! Betting on the yesterday’s Mutual Fund Returns could prove disastrous Tomorrow.

by Holistic Leave a Comment | Filed Under: Mutual Funds

Holistic Investment - Mutual Funs

It is a widely-acknowledged practice to invest in a mutual fund that has yielded good returns in the past believing it will do well in the future as well. Even financial advisors are prone to stick to this past performance benchmark while recommending mutual funds.

Why everyone seems to be obsessed with the past mutual fund returns despite the disclaimer in the offer document of every fund saying clearly, ‘Past performance is no guarantee of future results?’

Studies abound showing that many mutual funds with good past returns have yielded poor results in the future. There is no close correlation between high performing mutual funds in one period with high performing funds in the subsequent periods.

Regardless of this fact, investors harp on past mutual fund returns while investing in the fund. Old habits die hard is what we can say. However, we must caution you against this practice.

The approach to judge a mutual fund on its past returns is fraught with danger. Here we list the reasons why chasing the past returns of mutual funds is a bad idea.

Mutual Fund Returns when Fund Managers move out or are changed…?

The performance of a mutual fund is also due to the manager managing it. If a mutual fund manager who is responsible for the brilliant returns of the fund resigns or is replaced, the performance of that fund is bound to be affected.

The new mutual fund manager may not be able to yield the same performance. If you’re not aware of the change in the fund management, betting on past mutual fund returns won’t be safe.

Risky Mutual Funds tend to yield stupendous returns in times of bubbles and booms

A mutual fund that entails high risk often clocks spectacular returns. In such cases, figures don’t betray the propensity of risk involved. This can be noted during booms and bubbles.

Recall the internet bubble of late 1990, many internet funds looked lucrative for investors and they rush to invest in those funds but when bust happened they suffered huge losses. In many instances more than 90% loss was recorded.

The same holds true with the real estate boom. When the going was great, none expected that it would crash but it did and made many investors in real estate company shares bankrupt.

In each case, mutual funds having a major stake in these high-risk assets looked like they had incredible returns until the bursting of the bubble happened. What gets proved that the criterion of judging a mutual fund is not reliable. Give a second thought before you pick a mutual fund solely for its past returns.

Huge Assets restricts the Mutual Fund Returns

If a mutual fund is performing well, investors scramble to pour money into it. This increases the volume of money the fund manager has to spin into a business. While it increases the management fees for the mutual fund company, it entails problems since with the increased cash it is harder to earn a good rate of returns.

For example, 1,000 crores mutual fund could yield better returns than 10,000 crores mutual fund could.

In the investment space, the size of the asset has a definite role to play. A mutual fund is restricted by law to invest only up to 5% of the networth of a single company. Hence the size of the fund’s capital if bigger makes it difficult to invest in focused or concentrated portfolios. A mutual fund with huge assets is forced to over-diversify.

A mutual fund with smaller assets can invest in focused portfolio and generate more returns.

If you can’t rely on past mutual fund returns, what are other ways to go for?

Now you’ve learned the perils of looking at past mutual fund returns alone while investing. You must be wondering how to evaluate a mutual fund worthy of investment. You will be close to the mark judging diversified equity fund on the following parameters :

  • Match your investment objective with that of the diversified equity fund
  • Evaluate returns across diversified equity funds within the same class
  • Check Diversified Equity Fund Returns against the benchmark index
  • Evaluate the consistency of the diversified equity fund
  • Check the costs associated with the diversified equity fund scheme
  • Risk-Returns analysis of diversified equity funds
  • In addition to the past mutual fund returns, looking at the above parameters will help you choose a right mutual fund.

Click here to find the best performing mutual fund now.

Calculate your Mutual funds returns:

If you want to know the expected returns from your mutual fund investment, here is an easy and simple to use “Mutual Fund Returns Calculator”.

Let’s see how it works.

First, choose the nature of your investment, whether SIP or Lumpsum investment.

a) If you choose SIP:Then type the amount of your investment, the frequency of your SIP, whether it be monthly, daily, or quarterly. Now select the annual interest rate. Then enter the duration of your investment. And towards the end, you will get the total amount invested and the future value of your investments.

b) If you choose Lumpsum: Then type the amount of your investment, then the annual interest rate, and the duration of your investments. And towards the end, you will get the total amount invested and the future value of your investments.

If you have any comments or questions, write them in the comment box below.

Or are you interested in creating a Comprehensive Financial Plan for your financial goals?

Skip the queue by registering for your 30 Minute FREE Financial Plan Consultation. Click the ‘‘BOOK YOUR SLOT NOW!’’ button below.

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Lingesh MMG
Lingesh MMG
20. September, 2023.
Na eppo tha financial goal la enna therunju kitta..enaku full support panna thuku thank you..🥰 friendly nalla pesuninga...
Ravi L
Ravi L
15. August, 2023.
Very knowledgeable and professional team, guided me with the precise financial solutions and timely suggestions.
Hardik Dave
Hardik Dave
5. July, 2023.
Holistic Investment is really nice and trust worthy financial planner. They plan things in realistic manner and also consider future dimensions of items also. They are always available for small or big queries, and also share knowledge and help you become more financial literate, and take right decisions in all financial matters.
Dr. Padmakar Wagh
Dr. Padmakar Wagh
27. June, 2023.
Mr Ramalingam who is the Director of Holistic investments has a excellent financial planning knowledge, the entire Holistic team has been very helpful in my financial planning journey and execution. This is my third year of financial planning with Holistic investments and so far I am satisfied with the progress I have made.
Binamra Dash
Binamra Dash
13. June, 2023.
Very knowledgeable team. Guided me properly with my concerns.
Murugan Bala
Murugan Bala
16. May, 2023.
I have been investing through Holistic for the past 4 years and my experience with them have been really good. The team of Rajan and Ramalingam doing excellent services in meeting my needs through proper guidance on investment options customized. Theya re always available on any specific needs time to time.I would recommend their services to my friends and colleagues too.
Neeraja R K
Neeraja R K
15. May, 2023.
Working with holistic investment planners was a really wonderful experience for me. For me the entire team had been very supportive in all ways. Their working strategy is well planned and methodical. They always keep me informed and updated about my investments, so that i can take informed decisions. The team first helps us understand the basics of investments, then they collect data, work with the data and then provide investments solutions according to our goals which i find it the best. Good luck to the entire team.
deepika kulkarni
deepika kulkarni
21. April, 2023.
We have availed holistic service from last couple of years and are very happy with our decision. Their systematic approach has helped us plan our finances and meet our goals. They provide very comprehensive and detail plan and resource management every 6 months which ensures we are on right track to achieve our goals. Rajan and Ramalingam from holistic are always there to help us with our queries. They have also accommodated any changes to our goals or resources mid year in a professional manner.
Ashook Panneerselvam
Ashook Panneerselvam
21. March, 2023.
For the past year, I have been interacting with Holistic Investment. I frequently read Nanayam Vikatan, which is a publication owned by the Vikatan family, and I was impressed by their financial advice. My brother also suggested holistic investing, and he also got excellent financial advice. Holistic Investment follows a methodical approach that I really liked because they first fully understand our financial situation "As Is," which includes "Assets" and "Liabilities," as well as our short-, mid-, and long-term goals, on the basis of which they provide a detailed plan on how to achieve our goals for which they are recommending various investment options. Even in the investment advice, why do they suggest particular mutual funds and what is the justification behind it, which adds transparency to the client. One essential factor is that they are always available. Even if I needed to make some urgent financial decisions, they were very helpful and kind to answer my questions via phone calls, WhatsApp messages, and emails. I was very happy with their service. Periodic reviews are also crucial, even though I have forgotten that they occur once every three months, and I also intend to renew this year.
Mahesh S
Mahesh S
19. February, 2023.
I have availed Holistic investment service for last 1yr against my early retirement decision. they provided me comprehensive detailed report how to move ahead with my existing resources. moreover, they are available to me whenever i have any doubt.. highly recommend others to avail their service
Google rating score: 4.5 of 5,
based on 104 reviews

Google Reviews

Lingesh MMG
Lingesh MMG
20. September, 2023.
Na eppo tha financial goal la enna therunju kitta..enaku full support panna thuku thank you..🥰 friendly nalla pesuninga...
Ravi L
Ravi L
15. August, 2023.
Very knowledgeable and professional team, guided me with the precise financial solutions and timely suggestions.
Hardik Dave
Hardik Dave
5. July, 2023.
Holistic Investment is really nice and trust worthy financial planner. They plan things in realistic manner and also consider future dimensions of items also. They are always available for small or big queries, and also share knowledge and help you become more financial literate, and take right decisions in all financial matters.
Dr. Padmakar Wagh
Dr. Padmakar Wagh
27. June, 2023.
Mr Ramalingam who is the Director of Holistic investments has a excellent financial planning knowledge, the entire Holistic team has been very helpful in my financial planning journey and execution. This is my third year of financial planning with Holistic investments and so far I am satisfied with the progress I have made.
Binamra Dash
Binamra Dash
13. June, 2023.
Very knowledgeable team. Guided me properly with my concerns.
Murugan Bala
Murugan Bala
16. May, 2023.
I have been investing through Holistic for the past 4 years and my experience with them have been really good. The team of Rajan and Ramalingam doing excellent services in meeting my needs through proper guidance on investment options customized. Theya re always available on any specific needs time to time.I would recommend their services to my friends and colleagues too.
Neeraja R K
Neeraja R K
15. May, 2023.
Working with holistic investment planners was a really wonderful experience for me. For me the entire team had been very supportive in all ways. Their working strategy is well planned and methodical. They always keep me informed and updated about my investments, so that i can take informed decisions. The team first helps us understand the basics of investments, then they collect data, work with the data and then provide investments solutions according to our goals which i find it the best. Good luck to the entire team.
deepika kulkarni
deepika kulkarni
21. April, 2023.
We have availed holistic service from last couple of years and are very happy with our decision. Their systematic approach has helped us plan our finances and meet our goals. They provide very comprehensive and detail plan and resource management every 6 months which ensures we are on right track to achieve our goals. Rajan and Ramalingam from holistic are always there to help us with our queries. They have also accommodated any changes to our goals or resources mid year in a professional manner.
Ashook Panneerselvam
Ashook Panneerselvam
21. March, 2023.
For the past year, I have been interacting with Holistic Investment. I frequently read Nanayam Vikatan, which is a publication owned by the Vikatan family, and I was impressed by their financial advice. My brother also suggested holistic investing, and he also got excellent financial advice. Holistic Investment follows a methodical approach that I really liked because they first fully understand our financial situation "As Is," which includes "Assets" and "Liabilities," as well as our short-, mid-, and long-term goals, on the basis of which they provide a detailed plan on how to achieve our goals for which they are recommending various investment options. Even in the investment advice, why do they suggest particular mutual funds and what is the justification behind it, which adds transparency to the client. One essential factor is that they are always available. Even if I needed to make some urgent financial decisions, they were very helpful and kind to answer my questions via phone calls, WhatsApp messages, and emails. I was very happy with their service. Periodic reviews are also crucial, even though I have forgotten that they occur once every three months, and I also intend to renew this year.
Mahesh S
Mahesh S
19. February, 2023.
I have availed Holistic investment service for last 1yr against my early retirement decision. they provided me comprehensive detailed report how to move ahead with my existing resources. moreover, they are available to me whenever i have any doubt.. highly recommend others to avail their service
Google rating score: 4.5 of 5,
based on 104 reviews

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