The fund earned 19.1 percent a year.
Its investors earned 13.8.
Rs 1.97 cr
What that 5.3 point gap ate on Rs 10L over the same twenty years. Rs 3.30 cr at the fund's printed return. Rs 1.33 cr at the return its investors actually took home.
A friend forwarded me a factsheet last night. Twenty years, 19.1 percent a year, how can I go wrong. Here is the part the factsheet never prints. That return belongs to the fund, not to the people inside it. A twenty year study of investor cash flows in the same funds found the average rupee earned 13.8. Nobody stole the difference. It leaked out through the timing of the investors' own cheques.