One Lakh rupees invested in HDFC Equity Fund on 25th April 2001, in a dividend reinvestment option and the first dividend declared was Rs. 11,194.03 on 16th March 2002 and the fund was switched to Growth mode on 1st April 2002. By the time Rs. 1 lakh has grown to Rs. 1,26,574 almost 27% in one year time. (See the PDF attached, for better understanding).
This particular statement was generated on 10th October 2012 and that day prevailing NAV was 276.832 and value reads Rs. 15,51,124.85.
As on Friday (18/01/2013) HDFC Equity Growth NAV is 303.213. If you multiply this NAV to the existing units of 5603.127, you will get Rs. 16,98,940.94 (Sixteen Lakhs ninety eight thousand and nine forty rupees and ninety four paisa only).
This fund has generated 27.26 CAGR for the past 141 months.
The SENSEX was closed on 3600 on 25th April 2001, even though this fund was not benchmark with SENSEX, most of the investor will know only Sensex value and they always quote I invested when SENSEX was at this level and now it is more than that level so I want to redeem.
In other words Sensex value 3600 (24/01/2001) grows to 20040 level (18/01/2013) on Friday which means it has grown 5.56 times (CAGR 15.73) as against the fund grows from 1 lakh to 17 Lakhs (approx.) which is 17 times (CAGR 27.26)!
My Observation based on the above Investment as follows...
1. All along I was showing only the fund returns, not the investor returns because investor hardly stays in equity market to enjoy the fruit.
2. This is one of my client (recently acquired) portfolio and still it is active and I have changed the client name to my name and all the sensitive data’s are changed to avoid any compliance issue. People have more conviction when they actually saw the statement of account that is the reason I have attached the same.
3. This is not the only fund generated such a huge returns, nearly dozen funds has given the same return or more return than this. But, I have statement for this fund only.
4. The beauty of the investment is no need to pay any tax and the investor can enjoy all the money, which reminds me the sayings patience pays...
5. This is the not the mail to promote this fund or this kind of return one can expect in the near future also, and being a financial planner my duty is to explain how powerful diversified equity funds are when you have invested long, especially for our long term goals like children education, marriage and retirement etc.
6. Don't always look at only SENSEX value, because the amount you invested most of the time will not replicate bench mark of SENSEX. Moreover, the fund manager has got the ability to create more alpha (more returns than benchmark they have chosen).
7. Sensex closing price on 18/01/2008 was 19013 and exactly 5 years later the Sensex closing price on 18/01/2013 was 20040 which mean CAGR of 1.05% in the last 5 years.
8. HDFC Equity Fund Growth option NAV was 207.76 and today it is 303.213 which are CAGR of 7.85% as against SENSEX CAGR of 1.05%. In the SIP mode for the last 5 years (60 months) the amount invested is 2000*60=1,20,000 and the value today is Rs. 1,81,310 which is CAGR of 15.33%.
9. Mutual Fund investments are well regulated and unfortunately the investors are not willing to take part the way they took part in real estate and GOLD.
10. Based on the above facts and figures I strongly believe that 15% CAGR for the next 5 years is almost you can take it for granted. Hope people have witness the trailer in 2012 for equity returns.
The entire analysis is to show how big this particular investment vehicle is and it is meant for masses (poor to rich). I reiterate once again that mutual fund is the only route in which everybody can create a huge wealth over a long period.
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