How Much Returns can I get in Mutual Funds?

When you’re keen on investing in any mutual fund scheme, you compare the option considering several factors. Probably, the most common question that fund managers have to deal with is, “how much return will I get from mutual funds?” While estimating returns from a fund is significant;however, the potential of high or low profit depends on your risk tolerance level as an investor. Let’s understand the returns potential of different types of mutual funds.

• Debt funds: This is the low-risk mutual fund where you can earn returns at a rate varying from 7% to 10%. Debt funds are suitable for first-time investors and senior citizens.
• Large Cap Funds: This type of mutual fund offers returns at the rate of 12% to 13%. With moderate risk, you can stay invested in the mutual fund scheme for four years and more.
• Small Cap Funds: High risk investors can opt for small cap mutual funds. Small cap companies offer returns in the range of 15% to 20%. If you’re looking for a long-investment horizon, this is an ideal fund.
• Multi Cap Funds: With moderately high risk, this type of fund invests mostly in multi cap companies. You get to earn returns at a rate of 15% to 20%. If you want to invest for five years and more, you can opt for multi-cap funds.
• Balanced Funds: It includes some part of the debt and some part of equity funds. Balanced funds are suitable for investing money for 2 to 4 years. These funds allocate the majority of the funds in equity so that you can earn capital appreciation. At the same time, you get to hedge against the risk by investing some part of the money in debt funds.

If you’re looking at yields in terms of duration, you can either opt for low, medium, or long investment horizon mutual funds. In case your objective is to stay invested for a period of more than five years, equity funds are the best option. For medium to low duration investment, you can choose balanced funds and debt funds, respectively. You can derive returns at the rate of 7% to 12% if you’re opting for funds with medium or low duration. For long-term investment, the expected returns can be between 12% and 20%.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.