62% SIPs in equity schemes failed to beat their benchmarks in 10-year horizon

Mutual fund investors invest in equity mutual funds to achieve their long-term financial goals. Most of these SIPs are in actively-managed schemes. Do they beat their respective benchmarks? The question is relevant especially at a time when passively-managed or index-based investing schemes are making their entry.

An ETMutualFunds study found that around 62% SIPs or Systematic Investment Plans in equity schemes have failed to beat their benchmarks in the 10-year horizon. ETMutualFunds considered the SIP performance (XIRR) of 146 equity schemes in the 10-year horizon and compared the performance with relevant current benchmarks. Around 91 equity schemes have failed to beat their respective benchmarks. We considered only regular, growth schemes for the study.

The large cap category had the highest number of underperformance. Around 20 schemes out of 24 schemes, underperformed their benchmarks. That is 83% of underperformance. Large & mid cap, and mid cap category had 78% of underperformance. Both the categories had 18 schemes and 14 schemes underperformed against their respective benchmarks. Out of 27 ELSS funds, 19 schemes underperformed their benchmarks. In other words, 70% ELSS funds underperformed their benchmarks.

Multi cap category and contra fund category had negligible underperformance. Multi cap category had 6 schemes, out of which no schemes underperformed their benchmarks. The contra fund category had 3 schemes, out of which no scheme underperformed against their benchmarks.

Most of the categories were not able to beat their benchmark in the 10-year horizon. Some schemes offered better returns or double-digit returns, but they failed to outperform their benchmarks.

We considered equity categories such as large cap, large & mid-cap, mid cap, small cap, multi cap, flexi cap, focused, contra, value-oriented, and ELSS categories for the study. The 10-year XIRR returns of the schemes were compared to their respective current benchmark performances during the same horizon. The SIP returns for the 10-year horizon were calculated for the period April 15, 2013 to April 15, 2023.Note, this is not a recommendation. This is just an exercise to see how SIPs in these schemes fared vis-a-vis their benchmarks. We have considered their current benchmarks for the study. For recommendations, please read our best recommended schemes in 2023.