Around 50% equity mutual fund schemes beat benchmarks; small caps fare better

A little over 50% of equity schemes have beaten their benchmarks in this calendar year so far, shows data from Value Research, a mutual fund tracking firm. As per data, as many as 461 equity mutual fund schemes, out of some 905 schemes, beat their respective benchmark indices in the period between January and mid-November.

Equity schemes such as Quant Small Cap Fund and Quant Infrastructure Fund have given returns over 80% each in this calendar year. The year-to-date (YTD) return of their benchmark indices has been in the range of 39-56%.

Kotak Small Cap Fund, Principal Small Cap Fund, Tata Small Cap Fund, Nippon India Small Cap Fund, Canara Robeco Small Cap Fund, BOI AXA Small Cap Fund and Edelweiss Small Cap Fund are among the top-performing schemes of the year, each giving a return of over 60% this year so far.

Top performing equity schemes of 2021

Small cap funds have fared better as most top-performing equity schemes belong to the small cap category. Out of 53 small cap funds, as many as 33 beat their benchmark indices in this year. In other words, around 62% small cap schemes beat their benchmark indices, according to Value Research data.

Smallcap schemes

Mid cap schemes have done relatively poorly in the current year. Out of 59 mid cap schemes, only 23 schemes managed to beat their benchmark indices. That means only 39% mid cap schemes beat their benchmarks.

Midcap funds

The performance of large cap funds have been subdued. Out of 191 large cap equity schemes, only 43 could beat their benchmark index. In percentage terms, nearly 23% large cap schemes could beat their benchmark indicex, data available with Value Research shows.

Top largecap schemes

Fund managers and wealth advisors point out that the performance of equity schemes has been in line with expectations.

“I would say the performance of mutual funds as a whole has been in line with expectations if you compare this to more matured markets like the US. It is common to see even 80% of actively managed funds actually underperforming their benchmarks in matured markets,” said Suvajit Ray, Head of Products, IIFL Securities.

Jharna Agarwal, Head – Products at Anand Rathi Preferred, also highlights the role of fund managers in outperforming the benchmarks.

“At large, equity mutual funds have done well this year. A lot of fund managers have been very nimble in their portfolio construction strategy. New pockets of investments and tweaks in portfolios as per the emerging trends seem to have worked in favour of equity funds,” said Agarwal.

Equity mutual fund investors need to keep in mind that the market may remain volatile in the short term, fund advisors warn.

“After the supernormal returns we have seen in the last 18 months (over 100% in large caps and 200% in mid & small caps), it is important for investors to moderate their return expectations from equity investments to more long term average kind of returns, that this asset class has given – about 12% to 15% per annum,” said Ray.

“Investors with long term investment horizon of 5 years plus can continue to hold their equity mutual fund investments. Also, SIPs are always a good way to build a corpus in equity mutual funds,” he said.


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