Equity & Mutual fund equity

Investing in equity means partaking in the growth of a company. So, over a longer period, you can see your money grow alongside the wealth of the basket of companies you have invested in through equities. Equities in India have delivered average annual return of 17% (S & P Sensex / CNX Nifty)

(Source: www.bseindia.com and www.nseindia.com )


Source: Bloomberg, MOAMC Internal Analysis. Data as on Nov 30, 2015

As the above graph shows, over the last 35 years, equity has outperformed fixed income and gold by a huge margin.

Disclaimer: The above graph is used to explain the concept and is for illustration purpose only and should not use for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

Buffett Explains Why Equity is Best

Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions. That lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk. Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray…read full article

Sensex Rolling Returns Calculator

The Sensex Rolling Returns Calculator lets you see for yourself that while there is a risk of negative to low returns in the short to medium term due to the volatile nature of equities, you are likely to achieve superior returns over the long term. To conclude, the longer you remain invested in equities

  • Lower is the probability of loss
  • The volatility of returns reduces
  • The returns from equities become predictable

Mutual Fund Equity

Invest in stocks either directly or through equity mutual funds. Buy stocks only if you have a reliable adviser or understand a company’s business and financials to visualise its earnings growth. Equity mutual funds are a better vehicle for retail investors. Here you can leave the stock selection to a fund manager. You have the choice to invest in passive funds such as ETFs, which buy stocks mirroring an index, or in active funds, which rely on the fund manager’s ability to select individual stocks for a portfolio.

Does direct investing provide any benefit over investing in equity mutual funds?

To answer this question, we conducted a study to compare the historical performance of Indian equity funds to that of the stock market over the last 10 years. We chose 25 equity mutual funds based on size (highest assets under management) to represent the entire equity mutual fund industry in each year. We compared the median yearly return for these funds to the yearly returns of the Nifty. Here’s what we found:


The conclusion: Equity mutual funds in India have been relatively consistent in outperforming the broader stock market.

Equities in general created wealth for investors over 10 years. Equity mutual funds outperformed the Nifty in 7 of the 10 years. The cumulative annualised return of Equity mutual funds over 10 years was significantly higher than the Nifty. This not surprising. Mutual funds are specifically designed as well diversified investment portfolios. Professional money managers who ensure rigorous investment discipline manage these funds. The fund managers are generally able to devote more time and resources to monitoring investments, than an individual could, and tend to react less to short term investor sentiment. Periodic evaluation and rebalancing has long been considered the secret ingredient of better investing.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.