Worried after election results? Mutual funds have a track record of giving healthy returns

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With the stock market behaving unpredictably after mixed election results, investors are worried about the returns they will earn on their mutual fund investments. Mutual funds have consistently delivered exceptional returns regardless of the outcomes in the last four elections, according to a report by Fisdom Research. The report considered large cap, mid cap, flexi cap, aggressive hybrid and dynamic asset allocation funds. The large cap mutual funds have offered the highest return of around 23.4% and lowest of around 11.2% between May 13, 2004 and May 16, 2009 during the first UPA government, which was a coalition one. During the same time period, mid cap funds have offered the highest return of 27.4% and lowest of 6.7%, followed by flexi cap funds which gave the highest return of 24.5% and lowest return of 8.5%.

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The next period of coalition government was from May 16, 2009 to May 16, 2014. During this period, these categories gave similar returns. Large cap funds offered the highest return of 23.5% whereas the lowest return was around 11.1%. The mid cap funds gave the highest return of 28.4% and the lowest was 8%. In the same time period, the flexi cap funds gave the highest return of 25.1% and lowest was 2.6%.

Under the government led by Narendra Modi from May 16, 2014 to May 23, 2019, mid cap and flexi cap funds offered similar highest returns of around 19.8% and 19.9% respectively whereas large cap funds offered the highest return of around 16.3%.

The next period was from May 23, 2019 to June 4, 2024 when the government under Narendra Modi was still in majority. In the said period, mid cap funds offered the highest return of around 32.6%, followed by flexi cap funds which gave the highest return of 30.8%. During the same period, large cap funds gave the highest return of 17.5%.

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The report also considered aggressive hybrid and dynamic asset allocation funds. During the time period from May 13, 2004 to May 16, 2009, aggressive hybrid funds gave the maximum return of 20% and dynamic asset allocation funds gave 20.9% return. The highest and lowest returns offered by these categories were similar in the other periods.
The report also highlighted that the period from 2004 to 2009 witnessed the highest returns, a time when neither BJP nor Congress had a clear majority.

One should always consider risk appetite, investment horizon and goal before making investment decisions.

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