Generally investors , distributors and analyst compare fund return for the period say 5,7, 10,15,20, 25…. Years on year to year basis and draw the trend  . Our expectation of return is based on that and we believe will get the same . As we move ahead my understanding is it will reduce going forward . For example lets say if I got 18% CAGR for last 15 year holding I will end up less than 18% in next 15 year .

My assessment is based on some facts and logics

• The nos of stocks available has been increasing in the stock market. We have 3 market caps – large , mid and small . Though the number of universe in large cap remains the same i.e 100 the valuation of companies are higher than what they were 15 years back . In other words overall market cap of top 100 companies has increased . Now as the valuation go higher and higher the percentage return can not be the same . e.g if stock X was priced say 400 , growth of 25%  means prices becoming 500 . But if the price becomes say 1200 expecting price to become 1600 ( i.e 25% might not be so easy ) . In India most equity investors refrain to go for long term for the stock whose valuation has gone up. The general psychology of investor is they do see upside in a good company but not willing to stay invested for long term as they have entered at a very high price . So upside in large cap companies are there but will not maintain same growth percentage .  Also many of these today large cap were mid cap some years back or even small cap many years back . The rate of growth will not remain same as the base of growth ( price or earnings) grows . Today periodically some stocks are moving in or out from large cap basket . Now those entering in have already risen up on valuation and those going out have saw reduction in valuation . Those moved in again higher valuation becomes a limiting factor to some extent as explained earlier but those moved out creates not so positive image and investor again are a bit cautious for long term perspective . May be watch and gain by trading on short term . In Mid cap earlier the universe was 500 now reduced to 150 . This reduction of universe itself can create lesser trading opportunity based on short term price volatility . In Small cap the universe is very large but large universe has no relevance in fund management but how many stocks they are researching is important . Now again since research findings are almost on similar variables , similar methodology findings will not be having much of differentiating factors . Higher return will again be a function of tactical calls by fund manager . Also with reduction in total expense ratio some expense flexibility has been restricted by SEBI .
• There was a time when many AMCs were striving to reach break even level  . Once reached and generating good profit top AMCs have moved toward now increasing their AUM at a lower cost . They are putting more emphasis on platforms and direct option . Now since decision making is left more or less to investors who will be averse to volatility , the Fund Managers will be more inclined to protect short term downside risk than taking advantage of short term profiteering opportunity . It simply means allocation will have more long term strategic intent and less of tactical biases than earlier times. No AMC  wants volatility is return should create volatile AUM as that not only leaves large number of dissatisfied investors but also puts contact redemption pressure . So fund will prefer to go for constant good return than chase for higher return .
• We are in information age . With quick and smooth flow of information even trading activities also brings some sanity i.e we may not see higher volatility in stocks than past and that will also bring lesser volatility in equity fund performance .
• Now Indian stock market have integrated with other economies . Many stocks are traded at different stock exchanges in other part of globe. Information are analysed on real time basis with the use of better technical tools and technology . This will nullify any price differences existing in different markets . Some markets will factor in information in much better manner and those inputs will be of big use in Indian market and so arbitrage opportunity or return on price mismatch reduced further.
• Also as the return from Bank FD , G- Sec ( debt ) reducing the risk premium ( return of equity MF less risk free security ) will also either remain same or might reduce also . This means return from equity might reduce in comparison vis a vis past data .

Investors also needs to moderate their return expectation in percentage terms for long term holding . Indian equities will still deliver premium over debt on return side as our economy and industries are still in growth path and it has a long way still to go .