Instead of a single person buying shares of certain company, a mutual funds allows many
investors to pool their resources and have a common buying/holding strategy for the funds
so collected. The income generated by such investments is again distributed among all
investors in the ratio of the units of the mutual fund held by them.
While the US and European stock exchanges began much earlier and have evolved much
faster, the mutual fund industry in India began as late as 1963. The first asset management
company was Unit Trust of India (UTI), which was jointly formed by the Government of India
and the Reserve Bank of India. They were the only player in the field for more than two
decades. In 1987, India’s largest bank, the State Bank of India, branched out into mutual
funds. Again there was a lull for more than 5 years, when SEBI allowed private players to
come up with mutual fund offerings, and within the next 3 years, our regulator, SEBI, came
up with the necessary regulations for mutual funds.
Most of the mutual funds introduced in those decades have closed down, but there are still
a few old mutual funds which are still going strong. For each of these funds, if you had
invested in a monthly SIP of Rs. 5000, then you would have seen your investment value rise
to anywhere between Rs. 1.5 to Rs. 2 crores. Here is a brief introduction to five of these old
mutual funds:
investors to pool their resources and have a common buying/holding strategy for the funds
so collected. The income generated by such investments is again distributed among all
investors in the ratio of the units of the mutual fund held by them.
While the US and European stock exchanges began much earlier and have evolved much
faster, the mutual fund industry in India began as late as 1963. The first asset management
company was Unit Trust of India (UTI), which was jointly formed by the Government of India
and the Reserve Bank of India. They were the only player in the field for more than two
decades. In 1987, India’s largest bank, the State Bank of India, branched out into mutual
funds. Again there was a lull for more than 5 years, when SEBI allowed private players to
come up with mutual fund offerings, and within the next 3 years, our regulator, SEBI, came
up with the necessary regulations for mutual funds.
Most of the mutual funds introduced in those decades have closed down, but there are still
a few old mutual funds which are still going strong. For each of these funds, if you had
invested in a monthly SIP of Rs. 5000, then you would have seen your investment value rise
to anywhere between Rs. 1.5 to Rs. 2 crores. Here is a brief introduction to five of these old
mutual funds:
- HDFC Equity Fund: HDFC was one of the first private players in this space, and this fund was one of their earliest offerings in 1995. The reason for it still being so popular is that it has given an average compounded annual return of more than 23% in the last two decades.
- Franklin India Prima Fund: This fund was started even earlier, in 1993. It still remains one of the most popular mutual funds of Franklin Templeton. In the last year, the returns have been an impressive 14.66%. It has an average assets under management (AUM) of almost Rs. 6000 crores.
- Reliance Vision Fund: This fund was also launched in 1995. A good asset allocation process and a competent fund manager has helped it provide almost 20% annual returns in this period. In recent years the fund did see some volatility and lowered returns, but it has again begun to bounce back now.
- Tata Large Cap Fund: This fund was christened the Tata Pure Equity Fund when it was launched in 1997. It is a large cap fund which has still managed to give more than 21% returns in these 2 decades. The fund targets good returns in the medium to long term, and 100% asset allocation is in the stocks of large-cap blue-chip companies.
- ICICI Prudential Long Term Equity: This is the youngest fund in this list, and was launched in 1999. True to its name, it has done well in the long term. But its returns in the last 10 years have been around the 13% mark.
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