Magic of compounding: ₹1 lakh investment in these two mutual funds at launch would have grown to ₹20 lakh

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mutual fund scheme, investors tend to compare the annualised returns delivered by it to make a projection of future returns. Once a mutual fund category is shortlisted, one has to zero in on the schemes within that category. Thanks to the power of compounding, when an investment is made for a long time, the returns — more often than not — grow multi-fold.

For instance, when a scheme grows at a compounded rate of 15 per cent, the investment grows double in a span of five years. Likewise, when the investment continues to grow at the same rate of 15 per cent for a 10-year period, the total investment would swell four times. Here, we examine two mid-cap mutual fund schemes which have delivered healthy returns consistently for over two decades so that the investment made at the time of launch could have grown by a whopping 20 times during this period.

(Source:sbimf.com) SBI Magnum Midcap Fund was launched on March 29, 2005. As we can see in the table above, an investment of ₹1 lakh made one year ago would have grown to ₹1.41 lakh. In three years, this investment would have grown to ₹1.87 lakh.

In a span of five years, the investment of ₹1 lakh would have grown to ₹2.69 lakh, and in 10 years, this sum would have grown to ₹5.93 lakh. ALSO READ: Thanks to SEBI's crackdown on small caps, inflow into equity mutual funds slipped 16 per cent in March, AMFI data Likewise, if you had invested at the time of the scheme’s launch, the investment would have grown to a whopping ₹20.19 lakh by now. (Source: quantmutual.com) As we can see in the table above, an investment of ₹1 lakh made a year ago would have grown to ₹1.65 lakh.