64% equity schemes underperformed their benchmarks in five years

Around 64% equity schemes failed to beat their respective benchmarks in the five-year horizon, an ETMutualFunds study showed. We analyzed the performance of around 167 equity schemes that have completed five years in the market and found out that 107 schemes failed to beat their respective benchmarks. In other words, only 60 schemes managed to beat their benchmarks.

These 107 schemes were from across the categories such as contra fund, ELSS, flexi cap, focused fund, large & mid cap, large cap, mid cap, small cap, and value fund.

The large cap category was the worst hit. Around 88% large cap schemes underperformed their respective benchmarks in the five-year horizon. Out of 25 large cap schemes, 22 schemes underperformed their benchmarks. The next category to have a high number of underperformance was the focused fund category. The category witnessed around 75% of underperformance. The small cap category had the lowest percentage of underperformance. Around 7% small cap schemes underperformed their respective benchmarks.


Note, we did not include multi cap funds for the study as the data for the benchmarks was not available for comparison. Only seven multi cap schemes completed five years in the market.

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 trailing returns for comparison. We only considered regular and growth option schemes.

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. Many mutual fund advisors believed that actively-managed equity mutual fund schemes would fail to beat their total returns index or TRI benchmark. That is why, ETMutualFunds looked at the performance of equity mutual funds in the five-year horizon.

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 & 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
Best large cap mutual funds to invest in 2023