66% equity mutual funds underperformed their benchmarks in three years

Around 66% equity mutual fund schemes failed to beat their respective benchmarks in the three-year horizon, an analysis of performance by ETMutualFunds showed. We analyzed the performance of around 196 equity schemes that have completed three years in the market and found out that 129 schemes failed to beat their respective benchmarks. In other words, only 67 schemes could beat their benchmarks.

These 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.

Mid cap category was the worst hit. Around 83% mid cap schemes underperformed their respective benchmarks in the three-year horizon. Only four mid cap schemes – HDFC Mid Cap Opportunities, Motilal Oswal Midcap Fund, Quant Mid Cap Fund, and SBI Magnum Midcap Fund – could beat their benchmarks. Out of 24 mid cap schemes, 20 schemes failed to beat their benchmarks.

The flexi cap category witnessed around 76% of underperformance. Only six schemes could outperform their benchmarks. The small cap category had the lowest percentage of underperformance. Around 43% small cap schemes or nine schemes underperformed their respective benchmarks.

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

For analysis of performance, we considered equity categories such as large cap, mid cap, large & mid cap, small cap, ELSS, flexi cap, focused fund, value & contra fund. We considered trailing returns for comparison. We considered regular and growth option schemes. We did not consider multi cap schemes because the data for benchmarks was not available for comparison. Only eight multi cap schemes completed three years in the market.

Note, the above exercise is not a recommendation. The main purpose of the exercise is just to find out how many equity schemes have underperformed their respective benchmarks in the three-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
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