63% of equity investment funds fail to outperform benchmarks in three years

Around 63% equity mutual funds have failed to outperform their respective benchmarks in the last three years. There were around 213 equity mutual funds, out of which 135 funds have failed to outperform their respective benchmarks. In other words, only 78 equity funds have failed to outperform their respective benchmarks. mutual funds have outperformed their respective benchmarks over the period.

The mid-cap category was the most affected in the last three years. Around 80% mid-cap funds In the last three years, midcap funds have not outperformed their respective benchmarks. In the said period, there were around 25 midcap funds and 20 schemes that failed to outperform their respective benchmarks.
He small cap funds Next on the list were the small-cap funds. Around 74% of the small-cap funds have failed to outperform their respective benchmarks in the last three years. Out of the 23 small-cap funds, 17 schemes failed to outperform their respective benchmarks. Around 69% of the flex-cap funds and large-cap and mid-cap funds have underperformed their respective benchmarks. Both the categories had 26 funds each in the said period and around 18 funds each have underperformed in their respective categories.

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Around 16 specialist funds have failed to outperform their respective benchmarks. Around 64% large cap funds have underperformed their respective benchmarks. Two categories (ELSS and multi-cap funds) each underperformed by 56% over the past three years.

Value funds scored as underperforming (19%) over the past three years. Out of 16 value funds, 3 underperformed compared to their respective benchmarks.

Please note that we exclude contra funds for the analysis as the category has only three schemes and all three schemes have outperformed their benchmarks in the last three years.

The underperformers in three years

Axis ELSS Tax Saver Fund, the largest ELSS fund by assets under management, has failed to outperform its benchmark in the last three years. Mirae Asset ELSS Tax Saver Fund has also failed to outperform its benchmark. The fund returned 18.20% in the last three years as against 20% offered by its benchmark (NIFTY 500 – TRI).

The Parag Parikh Flexi Cap Fund, the largest flexi cap fund by assets under management, failed to outperform its benchmark. The fund returned 19.80 per cent in the last three years as against 20 per cent offered by its benchmark (NIFTY 500 – TRI). The Kotak Flexicap Fund and the Motilal Oswal Flexi Cap Fund also failed to outperform their benchmark. The SBI Focused Equity Fund returned 14.61 per cent in the last three years as against 19.99 per cent offered by its benchmark (BSE 500 – TRI).

SBI Large & Midcap Fund returned 21.63% in the last three years, compared to the benchmark index (NIFTY LargeMidcap 250 – TRI)’s return of 23.11%.

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SBI BlueChip Fund, a leading large-cap fund, returned 16.63% in the period against 17.94% for its benchmark (BSE 100 – TRI). Kotak Emerging Equity Fund, the second largest mid-cap fund in terms of assets under management, returned 25.59% against 29.14% for its benchmark (Nifty Midcap 150 – TRI).

SBI Small Cap Fund and HDFC Small Cap Fund offered returns of 25.29% and 27.70% respectively in the same time period, compared to the return of 28.71% offered by its benchmark (BSE 250 Small Cap – TRI).

DSP Value Fund and Groww Value Fund returned 17.17% and 17.95% respectively, compared to 20% for the NIFTY 500 – TRI. Quantum Long Term Equity Value Fund returned 19.23% in the last three years, compared to 19.99% for its benchmark (BSE 500 – TRI).

We consider all categories of equity mutual funds except mutual funds. We consider regular and growth options. We calculate the performance of the last three years.

Please note that the above exercise does not constitute a recommendation. The objective of the exercise is to determine which equity mutual funds have underperformed their respective benchmarks over the past three years. No investment or redemption decisions should be made based on the above exercise.

Risk appetite, investment horizon and objective should always be considered before making investment decisions.

(Disclaimer:The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of The Economic Times)

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