Have People Lost Money Investing in Mutual Funds ELSS with a 20-Year Horizon?

While mutual funds ELSS or any other type of mutual fund investment are subject to market risks, as these funds primarily invest in stocks, their long-term performance can be quite rewarding. Over the past two decades, the Indian market has consistently shown positive returns, particularly for passive and actively managed ELSS schemes.

Market Risks and NAV Variability

Mutual funds, including ELSS, are influenced by market fluctuations. The Net Asset Value (NAV) of any fund tracks specific indices, and thus, can exhibit short-term fluctuations. However, the long-term outlook for these indices is generally positive. For instance, over a 20-year horizon, indices have invariably provided positive returns with no negative performances recorded in such a long period.

Performance of ELSS Funds

Even passive investing in ELSS schemes has proven to be highly profitable over long-term horizons. An investor who has been invested in ELSS for the past 20 years would have seen substantial growth, with some estimates suggesting an 8-10 times return on investment. Active management, as in actively managed ELSS schemes, can amplify these returns even further.

Comparison of Growth with Different Investment Strategies

For an investor in a passive index fund, a 20-year investment horizon could yield a 8X return. However, an actively managed fund could offer even better performance, potentially achieving a return of 1.5X-2X over the same period. Therefore, the total growth could be as high as 12X-15X, making active management even more compelling.

ELSS Investments with a 20-Year Earmark

Investments in ELSS, whether made as a lump sum or through Systematic Investment Plans (SIPs), that have been held for 20 years without any interference, are likely to be in profits. This is particularly true when compared to other tax-saving investment options available in the market. The tax benefits of ELSS, combined with long-term market growth, make it an attractive choice for investors with a 20-year investment horizon.

Conclusion

For investors who have been holding ELSS investments for over 20 years, the likelihood of incurring losses is negligible. The Indian market, especially the ELSS segment, has historically shown consistent growth, making it a reliable option for long-term investment strategies. Whether one opts for passive or active management, the potential for substantial profits over such a long period makes ELSS investments an excellent choice for those seeking tax benefits and long-term financial growth.