Magic of Compounding: Monthly SIP of ₹12,000 in this mutual fund since its launch would have grown to ₹1 crore now

Prior to investing in a mutual fund, it is common among retail investors to examine its past returns vis-a-vis other schemes in the same category. Let us suppose, you zero in on a scheme in the large cap category, it is ingenious to compare the past returns of that scheme with those of other large cap mutual funds.

This not only gives a perspective of how much are the current investors earning, but also the upside available on that scheme in the near future.

After you have examined the past returns of a scheme, instead of undergoing a sense of FOMO, you can decide whether to invest in it or to move on to another one. Here, we hand pick one large cap mutual fund scheme and examine its past returns to ascertain how much wealth one would have accumulated if one were investing regularly into it via systematic investment plan (SIP).

The mutual fund we are referring to is 'ICICI Prudential Bluechip fund' which was launched in May 2008 i.e., around 16 years ago. This large cap scheme has delivered an annualised return of 15.92 percent since its launch. However, while calculating the return on SIP, the calculation is done quite differently. 

Each SIP is seen as a separate investment and the returns on all the SIPs are added to compute the corpus. The calculations given below are tallied with those on the fund house's portal where the 'fund simulator' reveals these figures.

This is how the total corpus would have grown if you were investing regularly ₹12,000 via SIP every month in ICICI Prudential Bluechip Fund

(Source: icicipruamc.com; AMFI; Returns as on Sept 30, 2024)

As one can see from the table above, if an investor had invested ₹12,000 every month for one year, the investment would have grown to ₹1.58 lakh by investing only ₹1.44 lakh.

Likewise, if an investor had invested ₹12,000 every month for a span of three years, the corpus would have swelled to ₹6.07 lakh by making an investment of ₹4.32 lakh.

In a five-year period, the monthly SIP of ₹12,000 would have grown to ₹12.77 lakh by investing only ₹7.2 lakh, shows the calculation on AMC's portal. Similarly, if an investor were investing ₹12,000 every month for 10 years, the total investment of ₹14.40 lakh would have grown to nearly ₹34.17 lakh in a decade.

Additionally, if an investor were investing ₹12,000 a month since the launch of the scheme, the total investment would have grown to ₹1.05 crore by investing only ₹23.64 lakh.

About the scheme

The scheme was launched on May 23, 2008. Its assets under management amount to ₹66,206 crore. Its key constituents are ICICI Bank, HDFC Bank, L&T, Infosys, RIL, Maruti Suzuki, Bharti Airtel, Axis Bank, Ultratech Cement, Sun Pharma and Hero MotoCorp. Fund managers of the scheme are Anish Tawakley and Vaibhav Dusad.

As per the scheme's risk-o-meter, investment in this scheme is of very high risk. Since its launch, the scheme has delivered an annualized return of 15.92 percent, whereas the benchmark index (Nifty 100 TRI) has delivered a CAGR return of 12.56 percent during the same period.

Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.