Most mutual fund participants swear by the prospects of actively-managed funds in India. They believe active fund management can still create extra returns for investors in the country, at least for the next five years or a decade. ETMutualFunds.com did some number-crunching to find out whether the fund managers really managed to beat the benchmarks with active fund management. Be ready for a surprise.
Well, at least 40 per cent actively-managed equity mutual fund schemes failed to beat their benchmarks in the five-year period. Even in the three-year period, 67 per cent equity mutual fund schemes failed to beat their benchmarks. In the one-year period, 65 per cent of the total equity schemes underperformed their benchmarks.
We have considered large cap, mid cap, large & mid cap, small cap, multi cap, tax-saving or ELSS, focused and value mutual funds. The data has been sourced from Ace MF.
Digging deeper, we found that the worst performer is the large cap category; 57 per cent of the actively-managed large cap schemes failed to beat their respective benchmarks. Multi cap category fared marginally better: 48 per cent of actively-managed multi cap funds underperformed their benchmarks. Tax saving or ELSS funds, which follow a multi cap investment approach, had a similar fate: 47 per cent of the total 34 schemes failed to beat their benchmarks.
One fourth of the 20 schemes in the mid cap category underperformed as well. Value funds also had three underperformers out of total eight schemes.
Taking a closer look at the top laggards in the five-year period, 13 out of 15 worst performers were smaller schemes with assets of under Rs 500 crore. The remaining two laggards managed slightly higher AUM: HDFC Growth Opportunities Fund with Rs 1,326 crore and Reliance Vision Fund with AUM of Rs 3,019 crore.
Take a look at the top laggards with AUM of at least Rs 1,000 crore in the table below:
| | CAGR Returns (%) | |
| Scheme Name | AUM (Rs crore) | 1-Yr | 3-Yr | 5-Yr | 5-Yr under-performance |
| HDFC Growth Opp Fund | 1,326 | 7.51 | 9.59 | 7.12 | -4.86 |
| Reliance Vision Fund | 3,019 | 7.00 | 7.45 | 7.78 | -3.35 |
| UTI Value Opp Fund | 4,571 | 3.94 | 9.13 | 7.83 | -3.19 |
| JM Large Cap Fund | 2,198 | 3.85 | 7.15 | 7.53 | -3.17 |
| ICICI Pru Large & Mid Cap Fund | 3,154 | 8.19 | 10.36 | 9.03 | -2.94 |
| Reliance Tax Saver (ELSS) Fund | 10,914 | 3.18 | 6.31 | 7.70 | -2.83 |
| HDFC TaxSaver | 7,545 | 7.70 | 11.35 | 8.14 | -2.52 |
| DSP Top 100 Equity Fund | 2,848 | 7.56 | 10.12 | 8.33 | -2.20 |
| IDFC Focused Equity Fund | 1,646 | -5.41 | 12.36 | 8.54 | -2.05 |
| Franklin India Bluechip Fund | 7,246 | 4.41 | 7.76 | 9.39 | -1.53 |
| ICICI Pru Midcap Fund | 1,765 | 1.20 | 9.95 | 11.51 | -1.24 |
| L&T Large and Midcap Fund | 1,415 | 0.22 | 9.49 | 10.01 | -1.01 |
| Sundaram Select Focus | 1,012 | 10.19 | 14.34 | 9.87 | -0.72 |
| L&T Equity Fund | 2,765 | 1.87 | 9.73 | 10.04 | -0.71 |
| ICICI Pru Value Discovery Fund | 16,363 | 3.01 | 6.83 | 10.13 | -0.62 |
| Reliance Multi Cap Fund | 10,687 | 15.16 | 11.76 | 10.20 | -0.55 |
| Canara Rob Equity Diver Fund | 1,265 | 10.85 | 14.40 | 10.49 | -0.53 |
| HDFC Top 100 Fund | 17,475 | 18.29 | 14.84 | 10.42 | -0.49 |
| IDFC Core Equity Fund | 3,015 | 3.41 | 11.38 | 10.72 | -0.30 |
| Aditya Birla SL Focused Equity Fund | 4,374 | 8.78 | 10.78 | 10.42 | -0.17 |
| HDFC Equity Fund | 23,231 | 18.26 | 14.81 | 10.50 | -0.16 |
| ICICI Pru LT Equity Fund (Tax Saving) | 6,425 | 9.54 | 10.78 | 10.52 | -0.14 |
| IDFC Multi Cap Fund | 5,573 | 0.82 | 7.99 | 10.66 | -0.08 |
| Aditya Birla SL Frontline Equity Fund | 22,002 | 6.73 | 10.20 | 10.51 | -0.08 |
5-year underperformance is against the schemes' respective benchmarks
Source: Ace MF