30-Year-Old Equity Schemes Yield 8-15% Returns: A Retrospective Analysis

    Examining the performance of six long-standing equity schemes in the Indian market over the past 30-32 years.

    The world of equity mutual funds is often dictated by the promise of double-digit returns over the long haul. Most investors and advisors harbour this belief, shaped by the historical performance of these funds. But does the past really hold up under scrutiny?

    ETMutualFunds conducted an in-depth study of the oldest equity schemes in the market to validate this belief. The study reveals the performance of six schemes that have weathered the market’s ebbs and flows for 30-32 years. Interestingly, five schemes delivered double-digit returns ranging between 11-15%, while one scheme reported single-digit returns around 8%.

    A Snapshot of the Schemes

    The six schemes encompass one aggressive hybrid fund, two large & mid-cap funds, and an ELSS fund, all of which have completed 30 years of existence. An aggressive hybrid fund and a thematic fund have been in the market for 32 years.

    One of the standout performers is the SBI Long Term Equity Fund, the oldest ELSS fund launched in March 1993. The scheme has provided approximately 15.51% returns since its inception. Notably, it was previously named ‘SBI Magnum TaxGain’93’ before the reclassification by SEBI.

    The other three funds that have completed three decades are SBI Large & Midcap Fund (formerly SBI Magnum Multiplier Fund), Tata Large & Mid Cap Fund (previously Tata Equity Opportunities Fund), and Canara Robeco Equity Hybrid Fund (earlier known as Canara Robeco Equity Debt Allocation Fund). These funds offered returns of 14.49%, 12.64%, and 11.27%, respectively, since their inception.

    The two schemes that have completed 32 years are SBI Magnum Equity ESG Fund (Earlier known as SBI Magnum Equity Fund), and LIC MF Equity Hybrid Fund (Earlier known as LIC MF Balanced Fund), offering 14.21% and 8.46% returns respectively since their inception.

    30-Year Performance Scorecard

    The table below provides an overview of the six equity schemes, their categories, inception dates, and returns since inception as of May 9, 2023.

    Scheme Name Category Inception Date Returns since inception
    SBI Magnum Equity ESG Fund Thematic Fund January 1, 1991 14.21%
    LIC MF Equity Hybrid Fund Aggressive Hybrid Fund January 1, 1991 8.46%
    Canara Robeco Equity Hybrid Fund Aggressive Hybrid Fund February 1, 1993 11.27%
    Tata Large & Mid Cap Fund Large & Mid Cap Fund February 25, 1993 12.64%
    SBI Large & Midcap Fund Large & Mid Cap Fund February 28, 1993 14.49%
    SBI Long Term Equity Fund ELSS Fund March 31, 1993 15.51%

    The study considered equity-oriented mutual fund categories, such as large cap, mid cap, small cap, large & mid cap, multi cap, flexi cap, focused fund, ELSS, contra, and value funds. It also included sectoral/thematic funds, aggressive hybrid fund, balanced advantage, and dynamic asset allocation fund. The study considered regular and growth options, including only schemes that have completed 30 years in the market.

    One striking observation is the public sector lineage of most of these schemes, such as SBI, LIC, Canara, and so on. This is primarily because most early mutual funds were established within the public sector. However, these schemes span diverse categories and have different risk-reward profiles.

    For instance, aggressive hybrid funds are considered ideal for conservative equity investors looking to create wealth for their long-term financial goals. On the other hand, large & mid cap funds are more suited for aggressive investors with a large risk appetite. These funds are mandated to invest 35% of the assets in large cap stocks and another 35% in mid cap stocks, which inherently makes them riskier.

    ELSS, or tax-saving schemes, are recommended to investors seeking to save taxes under Section 80C of the Income Tax Act. Investors can invest a maximum of Rs 1.5 lakh in these schemes and claim tax deductions on the amount in a financial year.

    Analysis and Comparison

    Comparing the returns of these schemes can be misleading, given their varied risk profiles. The comparison of an aggressive hybrid fund and a large & mid cap fund wouldn’t necessarily paint an accurate picture, considering the difference in risk and reward expectations.

    To provide a fair analysis, it’s crucial to consider these differing risk profiles. For example, while a conservative investor may find an 11.27% return from an aggressive hybrid fund satisfactory, an aggressive investor might view the same return as subpar for a large & mid cap fund.

    A Note of Caution

    While this analysis provides a perspective on the long-term performance of these six schemes, it’s important to stress that this is not a recommendation. The exercise is merely an attempt to understand how these schemes, which have completed 30-32 years in the market, have performed.

    One should not make any investment decisions based solely on historical returns. Past returns do not guarantee future performance. It’s crucial to incorporate factors like goals, investment horizon, and risk profile while choosing a scheme.

    This retrospective analysis serves as a testament to the potential of equity mutual funds to deliver substantial returns over a long period. It sheds light on the performance of six schemes that have successfully navigated the tumultuous market environment for over three decades.

    However, as the saying goes, “past performance is not an indicator of future results.” Therefore, while historical data can provide valuable insights, investors should consider their individual financial goals, investment horizon, and risk tolerance when choosing an equity mutual fund.

    The Indian mutual fund industry has evolved significantly over the past 30 years, and it continues to provide a wide array of investment options for individuals with diverse financial goals and risk profiles. As we move forward, it will be interesting to see how these long-standing schemes perform and adapt to the changing market dynamics.

    Disclaimer: While we make every effort to update the information, products, and services on our website and related platforms/websites, inadvertent inaccuracies, typographical errors, or delays in updating the information may occur. The material provided on this site and associated web pages is for reference and general information purposes only. In case of any inconsistencies between the information provided on this site and the respective product/service document, the details mentioned in the product/service document shall prevail. Subscribers and users are advised to seek professional advice before acting on the information contained herein. It is recommended that users make an informed decision regarding any product or service after reviewing the relevant product/service document and applicable terms and conditions. If any inconsistencies are observed, please reach out to us.

    Latest Articles

    Related Stories

    Leave A Reply

    Please enter your comment!
    Please enter your name here

    Join our newsletter and stay updated!