There’s no guaranteed return. It moves with the market. Here’s what’s realistic in Sri Lanka based on last 5-10 years:
1. By unit trust type – what to expect
| Fund type | Risk | Avg yearly return | What it invests in |
| Money Market Fund | Very Low | 5% – 8% | T- bills, FDs. short-trem debts |
| Income/Gilt Fund | Low | 6% – 10% | Gov bonds, corporate bonds |
| Balanced Fund | Medium | 7% – 12% | 50% stocks + 50% bonds |
| Equity/Growth Fund | Hight | 8% – 15% | 90% – 100% CSE stocks |
2. Real Sri Lankan examples, 2019-2024
These swing a lot year to year:
NDB Wealth Money Plus Fund: 5.5% – 7.5% yearly. Very steady. Beats savings accounts.
CAL Balanced Fund: Avg ∼9% yearly. But: 2020 = -5%, 2021 = +22%, 2022 = -12%, 2023 = +18%.
JB Vantage Value Equity Fund: Avg ∼12% yearly over 5 years. But 2022 it dropped 30%. 2023 it gained 40%.
Key rule: Higher return = higher drama. Equity funds can do +30% or -30% in a single year.
3. What drags returns down
1. Management fee: 0.75% – 2.5% yearly taken from the fund. Equity funds = ∼2%. That comes out of your return.
2. Market crashes: If CSE drops 20%, equity funds drop ∼18-22%. No hiding.
3. Interest rates: When FD rates are 15%, Money Market Funds do well. When FD rates are 5%, they’ll only give 5-6%.
4. So what’s realistic for YOU?
If you want FD-like safety: Money Market Fund. Expect *6-8%*. Better than bank savings 4%, slightly better than 1-year FD.
If you can handle ups/downs for 5+ years: Equity Fund. Expect *10-12% avg* long term. But be ready for -20% years.
2024 context: FD rates in LK dropped to ∼8%. So Money Market Funds are now doing 7-9%. Equity funds did ∼25% in 2023 because CSE boomed, but 2022 was brutal.
5. The 2 big traps
1. “Last year it did 25%, so I’ll get that”: Nope. Next year could be -10%. Only look at 5-10 year avg.
2. Comparing to fixed deposits: FD = 8% guaranteed. Equity fund = maybe 12% avg but with 3 bad years mixed in. Can you wait?
Rule of thumb: If you need the money in <3 years, stick to Money Market. 5+ years, equity funds make sense.
