A million dollars invested with Warren Buffett at the turn of the millennium would be worth an additional $2.6 million by the end of 2015. The gain would have been over $4 million if invested in the average diversified or large-cap Indian mutual fund.
The enormous tailwind of a soaring equity market, coupled with smaller asset size and market inefficiencies associated with an emerging nation, has helped an investor make more money from every invested dollar than the world’s most famous investor. This analysis is based on median returns for the funds under consideration. This also means that 50% of funds (ranked according to returns and not their assets under management) would have given higher returns than the Sage of Omaha.
To be sure, we are talking about two entirely different markets and even sizes of portfolio here. Indian mutual funds currently manage Rs.3.8 trillion in equity assets. For this comparison, only open-ended flexi-cap or large-cap funds—that can be directly compared to the market bellwether Sensex—have been included. The number of large-cap and flexi-cap funds grew from 25 in December 1999 to 120 in December 2015; now they have Rs.1.69 trillion in assets, according to mutual fund industry tracker Morningstar India data. On the other hand, Berkshire Hathaway, Buffett’s investment vehicle, had a stock portfolio of over $120 billion at the end of 2015, equivalent to around Rs.8 trillion.
Now, these 5 times returns for the median mutual fund are on a currency-adjusted basis. The rupee fell from 43.55 per dollar to 66.15 in the decade and a half till December 2015. The returns in rupee terms would be 7.98 times or twice Berkshire’s absolute returns in the same period.
