I save Rs 20,000 every month. My equity investments in the last three years didn’t give me any returns. Can you please suggest some funds that will give me 20% returns annually? — Anju Kumari
The long-term average return from the equity markets in India is between 13% and 15% annually. There is no asset class which can give you 20% return year after year. The premise of investing in a multi-asset instrument such as a mutual fund (MF) is that one gets the benefit of diversification and reduced risk while being exposed to asset classes that promise good returns over the long term. Even the most conservative, non-risky debt MFs cannot guarantee a return to its investors. One would have to go with the past track record and an understanding of the investment profile of a fund to form their expectation regarding its return potential.
In your situation, the disappointment at lack of returns from equity over the past few years is understandable. One would still have to recommend MFs as an investment vehicle of choice for retail investors who have a long-term horizon. Broadly diversified funds such as Quantum Long-Term Equity, HDFC Equity and Reliance Regular Savings Equity are some funds in which you can invest and expect fair returns over the long run.
The views expressed are of Srikanth Meenakshi, founder and director, FundsIndia.com