Buying Car: Which is better, Auto Loan or Mutual Fund SIP:If you take a car loan of Rs 10 lakh to buy a car, then at an interest rate of 9 percent, the monthly EMI for 5 years will be more than Rs 20,000. On repaying this car loan, a total of about Rs 12.50 lakh will come out of your pocket in 5 years. That is, you will pay about Rs 2.5 lakh only as interest. But if you had done a monthly SIP of just Rs 5,000 in a mutual fund scheme 5 years ago, then today your fund value would have been above Rs 10 lakh and you would not have needed to take a car loan to buy any car in the range of Rs 10 lakh. That is, you could have bought a car like Nexon, Brezza, Baleno, Venue, Sonnet or Mahindra XUV 3XO coming in this price range without a loan. Even the starting price of Hyundai Creta, the best seller in the Indian market, is only slightly higher than this.We have given this example to draw attention to how effective mutual fund SIPs can be in achieving different financial goals. All that is needed is a little planning. Now let’s talk about that mutual fund scheme, whose amazing SIP performance in the last 5 years has already been mentioned.
Scheme giving great returns in 5 years
The small cap scheme of Quant Mutual Fund has given an annual return of 51.03% on direct plan and 49.28% on regular plan during the last 5 years. At the same time, the same scheme has also given an annualized return of 50.83% on Systematic Investment Plan (SIP) in 5 years. According to this, if someone started a SIP of just Rs 5000 in Quant Small Cap Fund 5 years ago, then his current fund value would be more than Rs 10 lakh, whereas during this time he would have deposited only Rs 3 lakh through SIP. The expense ratio of the direct plan of the scheme is 0.64%. You can see this calculation here:
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This is how you can create a fund of Rs 10 lakh in 5 years through SIP
Scheme : Quant Small Cap Fund (Direct Plan)
- Monthly SIP: Rs 5000
- Investment period: 5 years
- Total investment in 5 years: Rs 3 lakh
- Annualized return on SIP over 5 years: 50.83%
- Total Fund Value after 5 years: Rs 10,09,966 (Rs 10.10 lakh)
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The magic of a lump sum investment of 50 thousand
In the above example, if we add a lump sum investment of just Rs 50,000, then the returns of Quant Small Cap Fund after 5 years will be even more tremendous. By doing this, the total investment will increase to only Rs 3.5 lakh, but after 5 years the fund value increases from Rs 10 lakh to Rs 14 lakh. You can see this calculation here:
Scheme : Quant Small Cap Fund (Direct Plan)
- Lumpsum investment 5 years ago: Rs 50,000
- Monthly SIP for 5 years: Rs 5000
- Total investment in 5 years: Rs 3.50 lakh
- Annualized return on lump sum investment in 5 years: 51.03%
- Annualized return on SIP over 5 years: 50.83%
- Total Fund Value after 5 years: Rs 14,00,451 (Rs 14 lakh)
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Historical Returns of Quant Small Cap Fund
The direct plan of Quant Small Cap Fund has consistently given better returns in the last 10 years. The return data of this scheme for the last 3, 5 and 10 years testify to this.
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Past Returns of Quant Small Cap Fund (Direct)
Return on lump sum investment in 3 years: 34.24%
Return on SIP investment in 3 years: 43.30%
Return on lump sum investment in 5 years: 51.03%
Return on SIP investment in 5 years: 50.77%
Return on lump sum investment in 10 years: 22.54%
Return on SIP investment in 10 years: 29.79%
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Portfolio of Quant Small Cap Fund
If we look at the asset allocation of Quant Small Cap Fund, 87.09% of this scheme’s investment is in equity, while debt investment is only 0.6%. The remaining 12.31% of the portfolio is invested in cash and cash-like instruments. The share of large cap shares in equity investment is 21.39%, mid cap shares 43.86% and small cap shares 34.75%. That is, even though the name of this scheme is Small Cap Fund, more than 65% of its equity portfolio is invested in large and mid cap shares. The scheme’s top 10 holdings include companies like Reliance Industries, Jio Financial, Aegis Logistics, Aditya Birla Fashion, HFCL, Sun Tv Network, Adani Power, Bikaji Foods Intl, RBL Bank, and National Aluminium (NALCO).
