Mutual fund investors earn much lesser returns that the schemes they invest in, shows a recent research done by Axis Mutual Fund. The reason—mutual fund investors are churning their portfolio which is affecting the returns.
As reported by The Economic Times, the research has taken into account the inflows and investor behaviour in equity and hybrid funds for the period of last 18 years and in debt funds for 12 years. The research points out that panic and FOMO both impact investor returns considerably over a long investment horizon both in lumpsum and SIP.
“The findings of the study are quite comprehensive and give us a sense of the damage being suffered by investors. Across categories and time periods, investor returns are significantly worse than both point to point fund returns as well as SIP returns,” says the report published by Axis Mutual Fund.
What should investors do?
Start early and invest regularly to get the full benefit of compounding
Have a clearly defined asset allocation plan and monitor it regularly
Do not get swayed by market noise in the short term – especially when the market is going through a correction. These things are part and parcel of the equity markets.
Invest in funds/ strategies that can deliver over the long term rather than following risky short term market fads.