43 years of SENSEX!
43 years of SENSEX - What should I expect while investing in Mutual Funds?
*** Don't forget to look at the probability of negative returns within 5 years of investing ***
- There were 11,000 trading days in the last 43 years!
Observations on positive and negative return occurrences:
🔰 SENSEX delivered 𝟭𝟱.𝟱% 𝗖𝗔𝗚𝗥 returns over the last 43 years.
🔰 𝗗𝗲𝗰𝗮𝗱𝗮𝗹 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 dispersion (CAGR)
𝟭𝟵𝟴𝟬-𝟭𝟵𝟵𝟬 - 21.6%
𝟭𝟵𝟵𝟬-𝟮𝟬𝟬𝟬 - 14.3%
𝟮𝟬𝟬𝟬-𝟮𝟬𝟭𝟬 -17.8%
𝟮𝟬𝟭𝟬-𝟮𝟬𝟮𝟬 - 8.8%.*
2020~ 2022 - 24.8%
🔰 BSE Sensex returns 15.5%, if we add an average dividend yield of 1.4% for the last 43 years.
At 16.9% compounding the value of BSE is actually around 𝘁𝗵𝗲 𝟴𝟬,𝟬𝟬𝟬 𝗹𝗲𝘃𝗲𝗹.🚀
🔰 Longest 𝗽𝗲𝗿𝗶𝗼𝗱 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 was from 1994 to 2003. 9 years in total.
🔰 Since 2002, in the last 18 years 𝗡𝗢 𝘀𝗶𝗻𝗴𝗹𝗲 𝟳 𝘆𝗲𝗮𝗿𝘀 𝗿𝗼𝗹𝗹𝗶𝗻𝗴 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 𝘄𝗲𝗿𝗲 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗿𝗲𝘁𝘂𝗿𝗻𝘀.
This means since 2002 if you ever invested and kept money for a minimum period of 7 years then you would have 𝗻𝗲𝘃𝗲𝗿 𝗹𝗼𝘀𝘁 𝗺𝗼𝗻𝗲𝘆.
🔰 But what is most surprising and rewarding has been the performance of actively managed equity funds. Here are the data:
𝗖𝗮𝘁𝗲𝗴𝗼𝗿𝘆𝘄𝗶𝘀𝗲 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 𝗳𝗼𝗿 𝟮𝟬 𝘆𝗲𝗮𝗿𝘀 (𝗖𝗔𝗚𝗥)
𝗛𝘆𝗯𝗿𝗶𝗱 - 15.96%
𝗗𝗶𝘃𝗲𝗿𝘀𝗶𝗳𝗶𝗲𝗱 -16.25%
𝗘𝗟𝗦𝗦 - 18.20%
**𝗔𝗹𝗹 𝗙𝘂𝗻𝗱𝘀 - 16.41%*
** excluding LIC/JM/Taurus/Quant MF schemes.
🔰 𝗦𝗘𝗡𝗦𝗘𝗫 𝘄𝗮𝘀 𝗮𝘁 𝟯𝟴𝟬𝟬 𝗶𝗻 𝗝𝘂𝗻𝗲 𝟭𝟵𝟵𝟲 (𝟮𝟲 𝘆𝗲𝗮𝗿𝘀 𝗯𝗮𝗰𝗸).
In the last 26 years, average-ex MF delivered 18% CAGR.
Had Sensex delivered as much as average MF schemes then the value of BSE Sensex should have been:
At 16.4% CAGR, SENSEX should be around 1,70,000 levels
At 18% CAGR, SENSEX should be around 2,38,000 levels.
LEARNING: Sensex has delivered great returns in the past & given India's demographic advantage may continue to deliver in the next decade or two also. Question is: Are we prepared to stay long-term (or) treat investments like our savings bank account & keep withdrawing now and then?
Courtesy: Parth Verma via LinkedIn
