June 2, 2023
admin
64% equity schemes underperformed their benchmarks in five years ?
Do you know??
Out of 167 equity schemes that have completed five years in the market, 107 schemes failed to beat their respective 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.
Shocking?? Please Study in detail:
Around 64% equity schemes failed to beat their respective benchmarks in the five-year horizon. 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.
The large cap category was the worst hit. 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, this doesnot 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 this study, we only considered regular and growth option schemes & considered trailing returns for comparison.
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.
Pl. understand that one should not make investment or redemption decisions based on the above exercise.
Why it is so??
Chanakya MFG discussed this issue with Investment experts and many of the experts opined in Confidence that one of the reasons is……many of the fund managers have very poor expertise in Equity investments. Many of the fund managers have qualifications like BTech, MTech etc. which has nothing to do with Equity investments. Only because of their past jobs, they are given the new assignments of investing crores of the funds of the innocent investors.
Explaining further, these experts argued, for medical surgeries, we appoint MS, to construct a bridge, we take services of a qualified Engineer, for legal cases, we take services of a qualified LLB, LLM etc, whereas for managing huge funds of the investors, many of the fund houses appoint BTech, MTech etc, with just 2/3 years of experience which is quite shocking.
Investment is a specialized subject and requires through understanding of various money-related aspects, and rich experience which these fund managers lack. One of the Expert, with whom Chanakya MFG discussed also informed that in earlier days, for banking jobs, a person from any discipline was appointed and now for crucial bank jobs, they ask for specialized knowledge.
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