Around 68 per cent equity schemes have failed to beat their respective benchmarks in a five year horizon, an analysis by ETMutualFunds showed. We analysed the daily rolling returns of 171 equity schemes that have completed five years of existence in the market and found out that 116 equity schemes have failed to beat their respective benchmarks. In other words, only 55 equity schemes have managed to outperform their respective benchmarks.
These 116 equity schemes were from contra, ELSS, flexi cap, focused, large & mid cap, large cap, mid cap, small cap, and value fund categories.
The large cap category was the worst hit. Around 88% large cap schemes underperformed their respective benchmarks in the five-year horizon. Out of 24 large cap schemes that have completed five years in the market, 21 schemes underperformed their benchmarks.
Mid cap and large & mid cap category had around 86% of underperformance. The mid cap category had 22 schemes and 19 schemes failed to beat their respective benchmarks. Large & mid cap category had 21 schemes and 18 schemes failed to beat their respective benchmarks.
The value fund category had an underperformance of 85%. ELSS and focused fund categories had 67% and 63% underperformance respectively.
The flexi cap category had an underperformance of 57%. Contra fund had an underperformance of 33%. Small cap category had the lowest underperformance score of around 6%. The small cap category had 16 schemes that completed five years in the market and only one scheme – Aditya Birla Sun Life Small Cap Fund – underperformed its respective benchmark.
For the study, we considered equity categories such as large cap, mid cap, small cap, large & mid cap, flexi cap, focused fund, value & contra fund. We considered daily rolling returns for the analysis. We only considered regular and growth option schemes.
Note, we did not include multi cap funds for the study as the data for the benchmarks was not available for comparison.
Note, the above exercise is not a recommendation. The exercise just tried to find out how many equity schemes have underperformed their respective benchmarks in the five-year horizon just after the TRI benchmark was introduced. Sebi introduced TRI indices for mutual funds in February 2018.
One should not make investment or redemption decisions based on the above exercise. Past performance does not guarantee future performance. One should always include risk appetite, investment horizon, and goal before making any investment.
If you are looking for recommendations, see:
Best large cap mutual funds to invest in 2023
Best large & mid cap funds to invest in 2023
Best focused mutual funds to invest in 2023
Best value mutual funds to invest in 2023
Best tax saving mutual funds or ELSS to invest in 2023
Best mid cap mutual funds to invest in 2023
Best small cap mutual funds to invest in 2023
Best flexi cap mutual funds to invest in 2023
