Bandhan Bank Versus Bandhan Mutual Funds: What If You Had Invested Rs 1 Lakh a Year Ago?

In this article, we are going to compare Bandhan Bank shares with schemes offered by Bandhan AMC across various categories.

Investors are often drawn to equity for its potential rewards, as equity shares have the capacity to deliver multibagger returns to shareholders. On the other hand, mutual funds are known for their peaceful investing approach, allowing you to allocate small portions of your earnings, which can eventually grow into significant amounts over time, although this growth typically takes longer compared to equity investments.

In the equity segment of your portfolio, the timing of both buying and selling shares is crucial, regardless of which companies you add to your holdings. Whether you're investing in Reliance Industries, Penny Stocks, or various categories such as small-cap, mid-cap, or large-cap stocks, buying at the peak can lead to losses when stock prices decline. Conversely, purchasing shares when they are at their low points requires careful consideration, as there are often valid reasons for their low trading prices. You’re not the only one who might think you've discovered a bargain; many others are likely analyzing the same stocks.

Often, in the pursuit of multibagger returns, we overlook the significance of mutual funds in our portfolios. In this article, we will compare the potential outcomes if you had invested Rs 1 lakh in either the equity shares of Bandhan Bank or one of the mutual fund offerings from Bandhan AMC across various categories.

Bandhan Bank Share Performance

Incorporated in 2014, Bandhan Bank is a commercial bank focused on serving underbanked and underpenetrated markets in India. The bank has a pan-India presence and offers a wide range of banking products and services, including asset and liability products, tailored for both micro banking and general banking.

Currently, Bandhan Bank Ltd's shares are trading at approximately Rs 176.60, down about 4.5 per cent from the previous day's closing price of Rs 184.95 on the BSE. The bank's market capitalization stands at around Rs 28,449.75 crore.

Despite being a mid-cap company, Bandhan Bank's shares have underperformed, lagging behind the Nifty Midcap Index, which has gained around 35 per cent over the past year. In contrast, Bandhan Bank's stock has delivered negative returns over multiple time frames, including the past 1, 3, and 6 months, as well as the last 1, 2, 3, and 5 years.

If an investor had invested Rs 1 lakh in Bandhan Bank shares with the hope of achieving multibagger returns, they would have lost nearly half of their capital, even over a longer time frame. Over the past five years, the stock has delivered negative returns of around 68 per cent, significantly eroding the invested amount.

Bandhan AMC's Scheme Performance

Let’s move on and explore the mutual fund schemes from Bandhan AMC to find out whether it was a good idea to invest in the funds launched across the categories.

Looking at the above performance of Bandhan AMC, it is clear that your invested money would have grown above your investment amount, meaning you would have gained significantly. For example, in the past year, you would have gained over Rs 70,000 on your investment of Rs 1 lakh in the small-cap fund. As a mid-cap company, if you had invested in the mid-cap fund of Bandhan AMC, you would have still gained over 50 per cent in the past year.

Conclusion

In conclusion, Bandhan Bank shares have led to substantial losses over the past five years, and the mutual funds have delivered impressive returns across categories. An investment of Rs 1 lakh in the small-cap mutual fund would have yielded over Rs 70,000 in just one year, while the mid-cap fund provided returns exceeding 50 per cent.

This stark contrast emphasizes the potential of mutual funds as a more stable investment option compared to direct equity investments. While equities may promise multibagger returns, the consistent performance of Bandhan AMC showcases their value in a diversified portfolio. Therefore, investors should weigh their financial goals and risk tolerance carefully when choosing between these investment options to achieve sustainable growth.

Furthermore, blindly investing in equity-based solely on social media recommendations is not advisable. A careful analysis of stocks and mutual funds is essential before committing your hard-earned money. It's important to conduct thorough research, understand the underlying fundamentals of the investment, and consider your financial goals and risk tolerance. Taking a thoughtful and informed approach will help you make better investment decisions and potentially lead to more favorable outcomes in your financial journey.

Disclaimer: The article is for informational purposes only and not investment advice.