Multiple investors are majorly puzzled concerning the decision-making that is needed to invest in a mutual fund. While the returns clocked by the mutual fund are an essential part of the decision-making, consistency over a particular period is also an essential factor to be considered. The average of a mutual fund in India is less than nine years, according to Morningstar. In the UK, the same average stands around sixteen years at an average.
Multiple funds can provide abnormal returns over a short-term time frame. However, very few mutual funds have consistently churned out returns for their investors over a prolonged period.
The founders of the longest-surviving mutual fund in the US modeled it around a straightforward idea when they launched MFS Massachusetts Investors almost a century ago. Mike Roberge, chief executive of MFS, said, “What this (fund) did was allow individual investors to pool their assets. It was (about) democratizing investments for ordinary people.”
Below is the list of the Oldest surviving mutual funds across the USA:
|Name||Global Category||Inception Date|
|MFS Massachusetts Investors||US Equity Large Cap Growth||15/7/1924|
|Pioneer||US Equity Large Cap Blend||10/2/1928|
|Congress Large Cap Growth Institution||US Equity Large Cap Growth||15/3/1928|
|Deutsche Total Return Bond||US Fixed Income||24/4/1928|
|Deutsche Core Equity||US Equity Large Cap Blend||31/5/1929|
Europe’s oldest mutual fund is the Robeco Global Stars Equities, which originated in the Netherlands with its inception date of 24/3/1993. The oldest mutual fund in the UK, the Threadneedle UK Select Fund, was incorporated on 22/3/1934.
Let us take a deep look at two of the oldest mutual funds in the world below:
MFS MASSACHUSETTS INVESTORS:
According to Morningstar, at just three years off its centenary, MFS Massachusetts Investors is the oldest open-ended mutual fund in the US. The fund, incorporated in 1924, and given its longevity, has managed to survive through various economic turmoil ranging from the Great Depression to the Global Financial Crisis of 2008. The firm’s focus is one of the longer-term horizons; there has been an extreme emphasis on capital protection in challenging market conditions by the fund. The fund still holds some of its first investments. 35 companies of the 45 original holdings still operate in some form today. The fund has managed to deliver a Year-to-Date Return (YTD) of 9.22%.
Philip Carret set up the fund. He was one of the first mutual funds to use socially responsible investment criteria, avoiding companies in the alcohol, tobacco, and gaming industries for the US arm of Europe’s largest fund house for much of its history. According to Amundi Pioneer Asset Management, he went on to inspire Warren Buffett.
“The fund’s long-term performance demonstrates that ESG investing can be very successful,” said Jeff Kripke, portfolio manager.
Oldest Mutual Funds in India:
The Indian mutual fund industry kickstarted in 1963 with the Unit Trust of India (UTI). The initial scheme launched by the Unit Trust of India with an initial capital of INR 5 crore. This program attracted the most significant number of investors in any single investment scheme over the years. By the end of 1988, UTI had INR 6,700 crores of Asset Under Management (AUM).
In 1987, Non-UTI public sector mutual funds entered the market. LIC and GIC set up their respective mutual funds, followed by SBI Mutual Fund in June 1987 and Canara Bank Mutual Fund in December 1987, respectively. Before the mutual fund industry was on the verge of being privatized in 1993, the public sector mutual fund industry had assets under management of INR 47,004 crores.
The sector was opened for privatization in 1993. Multiple players like Kothari Pioneer Mutual Fund, ICICI Mutual Fund, 20th Century Mutual Fund, Morgan Stanley Mutual Fund, and Taurus Mutual Fund launched their respective schemes. This sector has seen enormous growth since then and crossed the milestone of INR 10 trillion for the first time in May 2014. Within three years, the AUM had increased more than two folds and crossed INR 20 trillion for the first time in August 2017. As of July 31st, 2021, the AUM stood at INR 35.32 trillion, with enormous upside still left for the future.
Let us look at the performance of some of the oldest mutual funds in India:
|Fund Name||Inception Date||The current value of INR 10,000 invested during inception.
|Absolute Returns||Annualized Returns||Category Avg|
|UTI Master share Unit Scheme – IDCW||1/6/89||INR 522,383.00||5123.83%||13.06%||16.12%|
|SBI Magnum Equity ESG Fund||1/1/91||INR 155,806.60||1458.07%||9.37%||16.22%|
|UTI Flexi Cap Fund – IDCW||30/6/92||INR 399,814.60||3898.15%||13.49%||17.25%|
|Tata Large & Mid Cap Fund (G)||31/3/03||INR 419,959.30||4099.59%||22.53%||18.92%|
|SBI Large & Mid Cap Fund (D)||31/3/97||INR 393,513.30||3835.13%||16.24%||18.92%|
|Franklin India Bluechip Fund (G)||1/12/93||INR 1622,748.20||16127.48%||20.14%||16.12%|
|Franklin India Prima Fund (G)||1/12/93||INR 1444,351.60||14343.52%||19.64%||20.31%|
The Bottom Line:
The older mutual funds have managed to churn out fascinating absolute returns. However, very few of the funds have consistently outperformed the market on a longer-term time horizon. The older funds have managed to sail through various economic cycles and have churned out reliable performance. It does not mean that the newer mutual funds are risky investments simply because they do not have longevity.
Every investor should use a mix of several characteristics like time horizon, risk appetite, and financial objectives to choose a mutual fund. Mutual funds with longevity have satisfied multiple investors. Suppose the investments are made keeping the long-term horizon in mind considering multiple short-term abnormalities. Multiple mutual funds could average out all of the short-term abnormalities and create enormous wealth for their investors.