Panic defeats excitement

A few days back, there was this news that an Axis Mutual Fund study has found that investors earn lower returns than the funds they invest in. At first, this must be sounding illogical to anyone who understands the maths of any investing. However, a closer reading shows what is going on. The secret is not in the maths but in human behaviour. According to the reports, the AMC studied mutual fund returns generated over 20 years ending March, 2022. Over this period, actively-managed equity funds generated returns of 19.1 per cent p.a., but investors in such funds earned only 13.8 per cent p.a. This is a huge difference, and I really do mean huge. Over 20 years, 19.1 per cent means that Rs 1 lakh would grow to Rs 33 lakh while 13.8 per cent means just Rs 13.3 lakh. That's a life-changing difference - like being rich vs being middle class. Similarly, hybrid funds returned 12.5 per cen