Nippon India Growth Fund – Rs.10 to Rs.2051 Growth in 26 Yrs!!

On 6th September 2021, Nippon India Growth Fund NAV touched one more landmark of reaching Rs.2,000. The fund was launched on 8th October 1995 with Rs.10 NAV. It was a fantastic growth from Rs.10 in 1995 to Rs.2000 in 2021. But how was the journey?

Many of you may be aware that earlier it was Reliance Growth Fund. Recently when Nippon India AMC took over the Reliance AMC, the fund name changed to Nippon India Growth Fund. It is a typical Mid Cap Fund and its benchmark is S&P BSE 150 MidCap TRI.

Nippon India Growth Fund – Rs.10 to Rs.2051 Growth in 26 Yrs!!

If we look at the past returns in a plain way, then the chart looks like below (From Valueresearch)

You noticed that for almost 10 years, the fund is underperforming the Index. My idea of sharing this post is not to either recommend this fund for investors or showing negativity of this fund. Instead, to show how was the journey of 26 years.

If we look into the drawdown of the NAV movement of the last 26 years, the image looks like below. A drawdown is simply the % of fall from each of its past peaks.

You noticed that there was almost around more than 60% fall from its peak NAV rate during some period. This will give you the volatility the fund has gone through.

Now let us look into the Rolling Returns of 1 Yr, 3 Yrs, 5 Yrs and 10 Yrs. Rolling returns means simply what will be the outcome or probability if you invested in this fund for 1 year, 3 years, 5 years or 10 years periods. This will actually give us clarity on the volatility of returns.

a) Nippon India Growth Fund 1 Yr Rolling Returns

If you look into the 1 year rolling returns of the past 26 years, you noticed that there is a huge return distribution ranging from the highest of more than 270% to a 50% fall in your investment.

b) Nippon India Growth Fund 3 Yrs Rolling Returns

Even for 3 years rolling returns the returns vary ranging from a maximum of up to around 109% to negative returns of around 20%.

c) Nippon India Growth Fund 5 Yrs Rolling Returns

When we do 5 years rolling returns of this past 26 years, the distribution of returns varies from highest around 80% to negative around 6%.

d) Nippon India Growth Fund 10 Yrs Rolling Returns

For 10 years period, even though there might not be negative returns, but the return distribution varied from positive 48% to 6%.

By looking at all the above charts, imagine your situation of supposing you are an investor in this fund. Ask yourself the below questions.

a) Whether you hold the fund if it is consistently underperforming its benchmark for more than 5 years or so?

b) Whether you hold the fund for a year if its returns range from around 270% to negative around 50%?

c) Whether you hold the fund for 3 years if its returns range from around 100% to negative 20%?

d) Whether you hold the fund for 5 years if its returns range from around 80% to negative 6%?

e) Whether you hold the fund for 10 years if its returns range from around 48% to 6%?

When we look into such long-term equity performance like this fund had gone through from Rs.10 to current Rs.2051 NAV, everything looks fantastic and rosy. However, such a long journey of 26 years is not so smooth like many try to highlight. It is full of ups and downs.

Such ups and downs may be because of the market, fund underperformance, change in fund managers, change in AMC, or change in fund attributes itself. Being patient and sticking to your plan is most important during such a journey.

Equity investing ROSY in the long run and THORNY in the short run. That’s why I wrote an article that “Power Of Compound Interest – NOT the 8th Wonder of the world!“. No one will highlight the pain of the journey but all will try to highlight the rosy picture of equity investing. That’s why I wrote one more article on one more fund which few years back completed 25 years “Franklin India Bluechip Fund Completed 25 Yrs – If I had invested stories!“.