Sharekhan Blog

What are the Oldest Mutual Funds?

  • Mar 10, 2024

While the universe of funds nears 200 different options presently, there is interest in the history of mutual funds in India as the industry traces its origins way back to the 1960s.

This chronicle traces the evolution of the Indian MF industry and showcases some pathbreaking schemes that set the ball rolling. Understanding this legacy offers perspective on how far fund offerings have come while appreciating visionary products that showed retail investors the power of common pooled money decades back.

The Origins of Mutual Fund Culture in India

To track the oldest mutual funds still active presently, we need to go back to the roots of the investment vehicle in India. Some key milestones include:

  • RBI established Unit Trust of India (UTI) as a joint initiative between public and private sector banks and financial companies to channel retail savings into stocks.
  • UTI launches India's first mutual fund scheme - Master Share Unit Trust, allowing investors to participate in equities markets.
  • Private and foreign fund houses allowed ending UTI's monopoly. SBI Mutual Fund becomes the first non-UTI entity. Products start evolving across categories.
  • SEBI formulates strict regulations for transparency and governance to protect investor interests, given inherent risks.

As the industry evolved from a single-player nurturing market to hundreds of options today, some pioneering schemes led the way. For those interested in mutual fund history in India, let’s discover the surviving oldest mutual funds of India and their inspiring journey.

UTI Master Share Unit Scheme: The Trailblazer

As India's first equity-oriented fund, the UTI Master Share Unit Scheme is symbolic of the country's capital market coming of age. Established on 15 October 1986 under the stewardship of industry doyen Reliance founder Shri. Dhirubhai Ambani, this fund celebrates 37 years of enriching investor wealth.

Some details regarding the scheme:

  • Type: Equity fund investing predominantly in a diversified portfolio of listed stocks across market caps and sectors
  • AUM: ?11,306 crores (30 June 2023)

SBI Magnum Equity ESG: Socially Conscious Veteran

The SBI Mutual Fund itself is a veteran industry name launched just 6 years after UTI's dominance ended. Its flagship equity offering, the SBI Magnum Equity ESG scheme, is among the earliest schemes still serving investors for over 3 decades now.

Here's a lowdown on this sustainable investing pioneer:

  • Inception Date: 1 January 1991
  • Category: Equity Large & MidCap Fund
  • ESG Focus: 75% portfolio in companies meeting stringent ESG standards

Impressively, despite focusing its investments only on companies adhering to the best environmental, social and governance policies, the fund has offered approx. 16.5% CAGR returns over the past 31 years. This proves sustainable investing need not mean low rewards!

Tata Large & Mid Cap Fund: Big Name with Solid Returns

The Tata Mutual Fund has built its reputation on providing well-researched offerings backed by Tata Group's clout. When looking at the history of mutual fund, its flagship large and mid-cap fund has put its money where its mouth is from the start two decades back. This scheme wrote early chapters in the industry's evolution, delivering consistent returns across market cycles since inception.

Here are key details about this veteran player:

  • Launch Date: 31 January 2003
  • Category: Equity Large & Mid Cap
  • Top Holdings: HDFC, Infosys, ICICI Bank, TCS etc.

With formidable 20-year returns of approx. 16.6% and top quartile performance among peers, this fund proves its Alpha-generating mettle across market cycles utilising trademark Tata group's research and ethics.

Other Notable 20 Years schemes

Besides the equity funds highlighted above, a few other veteran schemes include:

  • Franklin India Prima Fund - Oldest AMC still serving investors since 1993 with ?10,081 Crores AUM today. Offers 19.17% CAGR over 5 years.
  • Franklin India Bluechip Fund - 28 years track record with 17.3% historic returns. Follows large-cap focus.
  • UTI Flexi Cap Fund - 30 years of expertise in investing across market caps based on relative valuations. Clocking 15% long-term returns.

The schemes offer diversity across market segments while beating benchmarks and inflation handsomely after decades of operating. This underlines mutual funds' merit as an all-weather asset class.

NOTE: The financial performance of mutual funds can fluctuate due to various factors, so it's essential to refer to the latest data for investment decisions

Why the Oldest MF Schemes Score on Stability

The benefits of some of the oldest mutual funds still available to invest in India after decades of existence are multifold compared to newfangled schemes:

  • Proven Track Record: Long-term NAV charts showcase the ability to ride market ups and downs successfully.
  • Standing the Test of Time: Withstood several black swan events like the 2000 dot com crash, 2008 financial crisis, etc and emerged stronger.
  • High Governance Standards: Stringent vetting by SEBI after 25 years ensures operational processes are investor-friendly and transparent.
  • Category Expertise: Singular fund focus from inception compared to today's thematic varieties builds unmatched ground-level knowledge.

While past performance isn't indicative of future returns, the assurance that comes with a 20-30-year operational history across managers gives confidence to long-term investors.

The Takeaway

The genesis of India's thriving mutual fund industry traces back over 3 decades when market access became easier courtesy of some pioneering fund houses like UTI and SBI. For those interested in mutual fund history, schemes such as Master Share Unit Trust enabled wealth creation from stock markets transparently at low charges. This pathbreaking solution marked the start of the industry democratising investments using professional management.

Team Sharekhan
by Team Sharekhan

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