Holding period for positive return from Indian mutual funds

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In India, households predominantly prefer to invest their surplus in financial securities, which provide stable return irrespective of whether they beat inflation or help in creating wealth. However, financial planners advise their clients to invest their surplus for long term in risky assets such as mutual funds to generate inflation beating returns. But when households ask for the meaning of long term in a definite number, it varies among the financial advisors. Hence, the study made an attempt to answer this question by calculating the minimum time duration required to generate a minimum positive return for two indices (NIFTY 50, S&P BSE SENSEX) and 6 mutual fund schemes for a period of 23 years and the same two indices (NIFTY 50, S&P BSE SENSEX) and 20 mutual fund schemes for a period of 12 years and found out that the time horizon or the long term to ensure minimum positive return ranges from 5 years to 9 years depending up on the type of fund or the level of risk associated with the mutual fund schemes.

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    • Table 1. Changes in financial assets of the household (in %)
    • Table 2. Risks and return of market indices
    • Table 3. Stationary test results
    • Table 4. Rolling period CAGR (in %) for S&P BSE SENSEX, NIFTY 50, FIPF, FIBF & FIPPF schemes (from 1995 to 2018)
    • Table 5. Rolling period CAGR (in %) for ABSLEH95F, HDFCCBVF and SBIEHF schemes (from 1995 to 2018)
    • Table 6. Rolling period CAGR (in %) for ABSLEF, ABSLEH95F, ABSLFLEF, DSPEHF, DSPOF schemes (from 2006 to 2018)
    • Table 7. Rolling period CAGR (in %) for FIEHF, FISCF, FITS, HDFCCBVF, HDFCHEF schemes (from 2006 to 2018)
    • Table 8. Rolling period CAGR (in %) for HDFCLTAF, HDFCLTOP100F, SBIBF, SBIEHF, SBIMMCF schemes (from 2006 to 2018)
    • Table 9. Rolling period CAGR (in %) for FIPF, FIBF, FIPPF, SBIMMULCF, SBIMTGF schemes (from 2006 to 2018)
    • Table 10. Rolling period CAGR (in %) for market indices S&P BSE SENSEX and NIFTY 50 (from 2006 to 2018)
    • Table 11. Rolling period risk and return behavior of S&P BSE SENSEX and NIFTY (from 1995 to 2018)
    • Table 12. Rolling period risk and return behavior of FIBF, FIPF and FIPPF (1995–2018)
    • Table 13. Rolling period risk and return behavior of ABSLEH95F, HDFCCBVF and SBIEHF (1995–2018)
    • Table 14. Rolling period risk and return behavior of ABSLEF, ABSLEH95F and ABSLFLEF (2006–2018)
    • Table 15. Rolling period risk and return behavior of FIBF, FIHEF and FIPF (2006–2018)
    • Table 16. Rolling period risk and return behavior of FIPPF, FISCF and DSPEHF (2006–2018)
    • Table 17. Rolling period risk and return behavior of FITS, HDFCCBVF and HDFCHEF (2006-2018)
    • Table 18. Rolling period risk and return behavior of HDFCLTAF, HDFCTOP100F and SBIBF (2006–2018)
    • Table 19. Rolling period risk and return behavior of SBIEHF, SBIMMCF and SBIMTF (2006–2018)
    • Table 20. Rolling period risk and return behavior of DSPEOF and SBIMMULCF (2006–2018)
    • Table 21. Rolling period risk and return behavior of SENSEX and Nifty (2006–2018)
    • Table 22. Summary of findings of minimum holding period for positive returns across indices and different categories of mutual fund schemes
    • Table 23. Summary of findings