For the last one year investors have shown immense faith in equity mutual fund schemes. According to news reports SIP Investments per month have jumped to a huge Rs 2,100 crores from barely half the amount in early 2014.

Mutual fund investments are seeing record inflows as investors move away from real estate and gold to equities.

If you had to invest in bank deposits a year ago, you would have got an interest rate of 9 per cent per annum. Check the returns of some of the equity mutual fund scheme returns in the last one year.

Now, it is not as if that all mutual fund schemes have given poor returns. In the last one year very few schemes have beaten bank deposit interest rates prevailing a year back.

In addition, if you have an emergency and redeem your units before one year there will be an exit load of one per cent, which further reduces your returns.

Would mutual fund schemes returns be higher than bank deposit returns?

In the long term mutual funds may outperform the returns from bank deposits. To begin with the interest rates on bank deposits have fallen sharply in the last one year. From 9.25 per cent, banks like SBI are offering a maximum interest rate of 8 per cent on term deposits, which is even lower than interest rates on post office saving schemes.

At the present moment the Sensex has fallen from peak levels of 30,000 in March to the current levels of 25,700 points. So , if you are investing now probably you would be investing at a lower net asset value. This would give individuals an opportunity to make money in the next one year.

If you are investing through Systematic Investment Plans there is nothing much that one can do.

If you are planning to invest a lumpsum amount the current net asset values, which have fallen substantially in the last 15 days make equity mutual fund schemes attractive.

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