Equity mutual funds underperformed by 50% of their benchmark in 2019
Out of 323 equity mutual fund schemes, around 160 failed to cross their benchmark in 2019. Though the data looks miserable, yet it has given a better performance than the 2018 calendar relatively. Moreover, 76% of schemes could not beat their benchmark in 2018. Consequently, in 2019, equity mutual funds underperformed by 50% of their benchmark.
The value-oriented equity mutual fund category remained the worst performer of the year. Around 77% of schemes that follow the value investing strategy did not achieve their benchmark. The value fund category underperformed consecutively for the second time. In 2018, 92% of the same scheme failed to beat their respective benchmarks. Wherefore, this category has generated 1.83% in 2019 vs -8.70% in 2018.
In the list of laggards, the ELSS and multi-cap mutual fund schemes stood with 63% and 53% respectively that underperformed their benchmarks. However, except for one tax saving scheme, all other schemes in both the categories have given positive returns in 2019. The multi-cap category, on an average, has generated 8.74% in 2019. That seemed much better than -6% average returns in 2018.
Subsequently, other categories like large-cap mutual funds had 55% of schemes underachieved their respective benchmarks. Also, one-third of large & mid-cap funds underachieved their benchmark indices.
An average of large-cap funds of 11% returns generated in 2019 as against 3% of average returns in 2018.
In 2019, the mid-cap mutual fund category offered 4.5% returns on average. The performance has worsened when the category on an average was -13.20% down in the last year’s calendar.
Also, small-cap schemes, around 29%, could not meet their respective benchmarks. On average, this category hit the worse in 2018 when it went down to 19%.
The list of Equity mutual funds below shows the top laggards of the year:
|Scheme Name||1- Yr return (%)||Underperformance score*|
|Quantum Long Term Equity Value Fund||-0.9517||-15.3044|
|ELSS or tax-saving|
|Nippon India Tax Saver (ELSS) Fund||0.4222||-9.7866|
|Principal Multi Cap Growth Fund||4.1285||-4.5184|
|Aditya Birla SL Frontline Equity Fund||7.7882||-4.5084|
|Large & Mid-cap schemes|
|UTI Core Equity Fund||1.2307||-4.9483|
|Quant Mid Cap Fund||-0.2763||-0.9178|
|HSBC Small Cap Equity Fund||-10.2934||-2.8959|
*Underperformance score= 1-yr returns of the scheme minus 1-yr return of the benchmark
Source: Ace MF
Though the performance in 2019 has improved to that of 2018, yet it annoys the most fund investors because of the average returns from all the categories. But investors should keep in mind that they are not investing in equity mutual funds for one calendar year. This article is just a piece of information. Readers should not take it as any kind of advice or recommendation.