We have talked about the different types of mutual funds we have in our previous post( Mutual Funds) so for this post we will strictly look at how well they have performed and compare them against each other. Even though Arkfund is a Balanced Mutual Fund, we decided to compare it against other equity funds because its equity section will lead to outperform most of the other Money Market Funds.
We have also explained what average annual compounding and total wealth is in Treasury Bills VS Mfund Vs FirstFund so we will move on straight to the calculations of these mutual funds.
Our comparison will take the returns from 2010 TO 2017 for each fund to calculate their respective average annual compounding rate and use a principal of Gh¢100
Again please note that all returns have been obtained from the fund sheets of the respective mutual funds and readers are encouraged to calculate the average annual compounding return and total wealth of each fund on their own.
EPACK
Epack is known to be the best performing Equity Mutual Fund and has been an award winner on several occasions. Lets see if by our calculations Databank’s Epack will still outperform its counterparts.
Using the returns above, the average annual compounding rate for Epack from 2010 to 2017 is 27.75% and a Gh¢100 investment in 2010 will be worth Gh¢555.29 by January, 2018.
Arkfund
This is another great product from Databank and even though it is not an award winner like Epack, Arkfund provides great returns for investors who are looking to balance their risk level.
Using the above returns, the average annual compounding rate for Arkfund from 2010 to 2017 is 26.33%. Using a principal of Gh¢100.00 and a time period of 7 years, the total wealth will be Gh¢513.51 by January,2018. This is a reduction of Gh¢41.78 as compared to the same Gh¢100.00 being invested in Epack.
Heritage Fund
Heritage fund is the only equity fund of FirstBanc Investment Firm and has been gaining grounds steadily. Even though it is not an Award Winner like its counterpart Firstfund, Lets see if it will beat any of the other equity funds abov
Using the above returns, the average compounding rate of Heritage Fund is 18.58%. Using a principal of Gh¢100.00 and a time period of 7 years, the total wealth will be Gh¢392.67 by January,2018. This is a reduction of Gh¢222.61 when compared to an investment of Gh¢100.00 in Epack for the same duration and a reduction of Gh¢120.84 when compared to an investment of Gh¢100.00 in Arkfund for the same duration.
Looking at the calculation above, the best equity fund that will give investors the best possible returns over the long run is Epack but most investors I have come across are scared of the Risk Level associated with Epack. I would recommend for some individuals to rather invest in Arkfund since it will give a similar return as Epack will but with a Risk Level of Low To Medium.
RECOMMENDATION
Looking at all these calculation, I would recommend a novice investor to open two investment accounts, One for the short term which will also be an emergency fund and One for the long term which will be the primary investment.
For the short term investment, Firstbanc’s FirstFund has been proved to give the best possible returns in our previous post. Firstbanc is a licensed investment firm that has been in existence since 2010 so invested funds will be in safe and good hands.
Looking at the long term investment, even though Databank’s Epack gives the best returns in the long term,I will advise you to go for Epack only if you have a high risk tolerance. For investors with Low risk tolerance, Arkfund is the recommended choice for long term investments.
Well in my personal opinion, it does not necessarily matter what your risk tolerance is. The goal of every investor is to get the best possible return and this cannot be obtained without an element of risk associated with the investment. In the case of Epack, when it produced a return of -12.21% in 2011 it recovered and made a return of 17.30% in 2012 thus cancelling out 2011’s return and adding an additional return of 5.09%. A similar event happened in 2016 and 2017, where the return for 2016 was -6.20% followed by a return of 39.54% in 2017, here the 2016 return as cancelled out by 2017’s return and an extra 33.34% was gained. This proves that there is nothing to fear when investing in High Risk or High Reward equity funds because in the long run, the loses are regained and more profit is made.
No One Ever Got Rich Playing It Safe – Unkown
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