You may not be earning as much as your fund is

Have you invested in a fund that gave high returns, but your returns didn't match up to it? This is due to the difference between the investment return and investor return. Investment returns are what you see in the marketing material of a fund house. Investor return is what you earn. While there are many reasons behind it, the difference primarily comes from investors trying to time the market. Buying when the market is at an all-time high and selling when it falls is the most significant factor affecting investor returns. The Axis Mutual Fund report 'Are investors creating enough wealth from their mutual fund investments' shows when investors get influenced by short-term market movements, it can lead to their returns underperforming the equity funds . The disparity can be as high as 6.5 per cent. There's another reason: people don't invest in funds for long. As per the 'FolioandTicketSize' report by the Association of Mutual Funds of India (AMFI) in June 2023, only 51.4 per cent of investors have a more than two-year holding period. These figures prove why investing decisions based on short-term market fluctuations can harm investors. How do investment returns vary

This article was originally published on September 20, 2023.