Introduction:
Mutual funds are often marketed as a smart choice for long-term wealth creation. Unlike Fixed Deposits(FDs) that offer stable but moderate returns, mutual funds can swing between high double-digit returns and even underperform a basic savings scheme over long periods.
Understanding Mutual Fund Performance: SBI Magnum Midcap Fund
To understand this better, let’s explore the performance of a real mutual fund — SBI Magnum Midcap Fund — over the last 10 years. Please note this is not a recommendation but being shared for better understanding of how the investment vehicle like Mutual Fund works.
About SBI Magnum Midcap Fund:
- It invests in medium-sized companies
- These companies tend to be more volatile but have higher growth potential
- The company’s performance depends on the economy and geopolitical factors
The 10-Year Performance: SBI Magnum Midcap Fund
| Year | Calendar Year Return (%) | Commentary |
|---|---|---|
| 2013 | ~1.8% | Market volatility led to flat performance. |
| 2014 | ~80.1% | A huge rally in midcaps following new government reforms. |
| 2015 | ~12.4% | Continued momentum, though at a more reasonable pace. |
| 2016 | ~6.9% | Continued pain in the midcap space. |
| 2017 | ~52.7% | Strong bullish sentiment; massive returns. |
| 2018 | ~(-18.9%) | Post-COVID recovery, markets surged. |
| 2019 | ~(-2.6%) | The midcap correction hit investors hard. |
| 2020 | ~31.5% | Post-COVID recovery; markets surged. |
| 2021 | ~58.4% | Midcaps saw one of their best years. |
| 2022 | ~4.6% | Market correction and global rate hikes. |
| 2023 | ~36.7% | Strong rally in Indian equities. |
SBI Magnum Midcap Fund v/s Fixed Deposit
Let’s say you invested ₹1,00,000(lumpsum or one-time investment) in both:
- SBI Magnum Midcap Fund in 2013
- Fixed Deposit at an average rate of 6.5% annually over 10 years
After 10 Years:
- FD: ₹1,00,000 would become approx. ₹1,88,000
- SBI Magnum Midcap Fund: Despite the ups and downs, it would be around ₹4,00,000+, depending on the exact date of entry and exit
Disclaimer:
- Between 2018 and 2020, the fund had 3 years of extremely poor performance, where many investors saw their portfolio fall by 20–30%, sometimes lower than their invested amount – In this phase, Fixed Deposits (FDs) clearly outperformed
- Those who stayed invested till 2021 or 2023 saw extraordinary returns, with multiple years giving 30% to 80 %+
Key Takeaway About Mutual Funds:
- Volatility is Real: Mutual funds can go through prolonged periods of underperformance
- Time in the Market > Timing the Market: The key is staying invested long enough to ride the full cycle
- Not for the Risk-Averse: If you want stability, FDs are better. If you can handle volatility, mutual funds can reward you
- Lump sum vs. SIP: Had you done Systematic Investment Plans (SIPs) instead of a lump sum, the ride would’ve been smoother, averaging out the volatility
- Asset Allocation is Key: Do not put all your money in midcaps. Balance it with large-cap, debt, and FD, depending on your goals
Summary:
Mutual funds can create wealth—but only if you understand the risks, stay consistent, and avoid short-term panic.
SBI Magnum Midcap Fund’s performance over the last decade is a classic case of high-risk, high-reward investing. While the long-term investor has been richly rewarded, those who panicked during bad years likely missed the rally.
Useful Tip:
Use mutual funds for your long-term goals (5 years and above), and keep FDs for short-term safety and emergency funds.
Lateral Thinking 
Leave a comment