First of all, 55x in 23 years isn’t our performance.
Our track record of research is for 8.5 years, which again has been decent, however, not smooth, especially the last 2 years. If interested, you can check here -> LINK
So, who has delivered 55x in 23 years?
Recently we came across an ad from DSP Equity fund and found some interesting bits and believe the same should be helpful for those who are increasingly getting disappointed with the performance of the stock market since the last 2 years.
The interesting bits are as below:
- 55x since 29th Apr’97, i.e. an investment of Rs 100,000 in Apr’97 would now be ~ Rs 55,00,000
- 55x in 23 years amounts to ~19% CAGR…better than most of the asset classes
However, as one would imagine, the journey wasn’t all smooth.
- There was a 1-year period wherein the fund went down by 54%
- There was also a 3-years period with -27% return
- These were the larger ones and of course there were several short-term falls.
What is important to note is that in the last 23 years we have had all kinds of negative events: Dot-com bubble burst, 9/11 attack on US, fall of NDA Govt. in 2004, one of a kind 2008-09 recession, 2011-13 slowdown, crisis in various European countries, etc.
Through all this, only 41 people stayed invested with the fund since inception. Our view is that the fund may have witnessed the highest redemption during the 54% fall or the 3 years period with -27% return.
Ironically though, those who invested during periods of drawdown, made much higher returns in the subsequent periods while the ones who redeemed lost out on an opportunity.
Since the last 2 years the economy is going through a phase of slowdown and the markets in general are down. Add to that, Corona Virus is the new crisis. However, if history is in any way suggestive of the future, periods of crisis/drawdown have offered the best opportunities for investment.
Disclosure: We don’t have any affiliation or association with DSP Mutual Fund and this article is in no way a recommendation to buy/sell their funds. We have used DSPs data only as an example.
Happy Investing and think different.