What is the average return on mutual funds long term?
Generally, stock mutual funds attempt to beat the returns of the S&P 500, which historically has produced 10.70% in its 65-year history. However, the majority of funds do not beat the benchmark. Roughly 79% of mutual funds underperformed the S&P 500 in 2021, a figure that has grown 86% in the past 10 years.
| Scheme Name | 1 Year | 5 Years |
|---|---|---|
| DSPBR Equity Opportunities Fund - Reg (G) 10.67% | 19.88% | 15.26% |
| Franklin India Bluechip Fund (G) | 12.08% | 10.80% |
| ICICI Pru Focused Bluechip Equity Fund (G) | 23.22% | 15.15% |
| Invesco India Equity & Bond Fund (G) | 13.97% | 10.91% |
| Period (start-of-year to end-of-2023) | Average annual S&P 500 return |
|---|---|
| 5 years (2019-2023) | 15.36% |
| 10 years (2014-2023) | 11.02% |
| 15 years (2009-2023) | 12.63% |
| 20 years (2004-2023) | 9.00% |
The average U.S. domestic stock mutual fund and exchange-traded fund returned 11.3 percent for the fourth quarter and 20.3 percent for the year. Note that the average fund substantially lagged the broad stock market averages. Most funds are actively managed, by professionals trying to beat the market.
As you can see, most of these funds managed to offer more than 12% returns in the last 25 years. Most mutual fund advisors and managers ask investors to use 12% returns for their calculations.
What Is the Average Mutual Fund Return Over the Last 20 Years? High-performing large-company stock mutual funds have produced returns of up to 12.86% in the last 20 years. Comparatively, the S&P 500 has produced returns of 8.13% since 2002.
Average Returns Generated By Equity Mutual Funds
The large-cap category of funds have given an average annualized return of 12.5% over the last 5 years. Large cap mutual funds invest in stocks having a large market share.
When we add another decade to the mix, the average return inches closer to the annual average of 10%. Looking at the S&P 500 for the years 1993 to mid-2023, the average stock market return for the last 30 years is 9.90% (7.22% when adjusted for inflation).
According to conventional wisdom, an annual ROI of approximately 7% or greater is considered a good ROI for an investment in stocks. This is also about the average annual return of the S&P 500, accounting for inflation.
Stock market returns between 1950 and 2023
This is a return on investment of 262,677.57%, or 11.28% per year. This lump-sum investment beats inflation during this period for an inflation-adjusted return of about 20,684.03% cumulatively, or 7.51% per year.
How are mutual funds doing in 2023?
So, with the stock market so strong in 2023, did the 2022 outflows reverse? Nope. In fact, by November, mutual fund outflows reached $430 billion, making 2023 the industry's second-worst year.
| Fund Name | 5 Years Return | 10 Years Return |
|---|---|---|
| Invesco India PSU Equity Fund (G) | 29.3% | 21.1% |
| DSP India T I G E R Fund (G) | 26.5% | 20.9% |
| ICICI Prudential Infrastructure Fund (G) | 28.9% | 20.8% |
| Quant Small Cap Fund (G) | 38.5% | 20.8% |
| Scheme Name | Plan | 10Y |
|---|---|---|
| SBI Long Term Equity Fund - Direct Plan - Growth | Direct Plan | 18.60% |
| HDFC ELSS Tax saver - Direct Plan - Growth | Direct Plan | 17.32% |
| Bank of India ELSS Tax Saver - Direct Plan - Growth | Direct Plan | 20.86% |
| Name | 5 year return (%) | Avg Return (%) |
|---|---|---|
| Axis Bluechip Fund Direct-Growth | 12.21 | 14.19 |
| Canara Robeco BlueChip Equity Fund Direct-Growth | 24.91 | 14.02 |
| Aditya Birla Sun Life Digital India Fund | 18.36 | 21.69 |
| SBI Small Cap Fund Direct-Growth | 14.62 | 13.97 |
The average annual return (AAR) is a percentage that represents a mutual fund's historical average return, usually stated over three-, five-, and 10 years. Before making a mutual fund investment, investors frequently review a mutual fund's average annual return as a way to measure the fund's long-term performance.
Consider investing Rs 15,000 per month for 15 years and earning 15% returns. After 15 years, the total wealth will be Rs 1,00,27,601 (Rs. 1 crore). According to the compounding principle, if we implement these very same returns and contributions for another 15 years, the amount we accumulate grows enormously.
Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average.
Conclusion. Investing in mutual funds for 20-25 years can help you create wealth and achieve your long-term financial goals. However, you need to choose the best mutual funds for your risk profile, investment horizon, and financial goals.
| Scheme Name | AUM (Rs Crore) | Expense Ratio (%) |
|---|---|---|
| ICICI Prudential Technology Fund | 8,993.09 | 2.11 |
| ICICI Prudential FMCG Fund | 1,156.49 | 2.57 |
| Sundaram Midcap Fund | 7,048.79 | 1.87 |
| Nippon India Growth Fund | 13,409.61 | 1.83 |
What were the top-performing funds? Top of the list by some margin was the JP Morgan Emerging Europe, Middle East & Africa investment trust, with a one-year return of almost 50%. The Amundi Semiconductor ETF comfortably took second place with a one-year return of 43%, well ahead of the iShares Poland ETF at 35%.
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Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.” “The current level of your income makes a big difference in determining if you're on track for retirement,” added Cox.
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills. Some millionaires keep their cash in Treasury bills.
- High-yield savings accounts.
- Certificates of deposit (CDs) and share certificates.
- Money market accounts.
- Treasury securities.
- Series I bonds.
- Municipal bonds.
- Corporate bonds.
- Money market funds.
