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Arthgyaan India Active Fund Scorecard (Dec-2023)

This is the first release of the Arthgyaan India Active Fund Scorecard to help mutual fund investors in India make better investment decisions.

Arthgyaan India Active Fund Scorecard (Dec-2023)


Posted on 19 Feb 2024
Author: Sayan Sircar
8 mins read
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This is the first release of the Arthgyaan India Active Fund Scorecard to help mutual fund investors in India make better investment decisions.

Arthgyaan India Active Fund Scorecard (Dec-2023)

Disclaimer: Please do your own research or take professional help before investing in mutual funds. The article does not have any fund names.

📚 Topics covered:

Introducing the Arthgyaan India Active Fund Scorecard

We have created a scorecard similar to the “S&P Indices versus Active (SPIVA) U.S. Scorecard” that is published regularly by S&P Global.

The purpose of this scorecard is to help Indian mutual fund investors make a conscious choice regarding fund categories for different investment horizons.

Since this scorecard talks about active funds, we will immediately discuss the most interesting part of the analysis below.

How many funds have underperformed their benchmarks?

Percentage of Underperforming Indian Active Funds (data for 31-Dec-2023

We have taken multiple fund categories and counted how many funds in each category has beaten their respective benchmark or not for each of the holding periods: 1Y, 3Y etc. This chart deals with lump sum returns only.

There are two ways to read this chart:

  • decide which fund categories consistently beat (or get beaten by) their benchmarks
  • for any particular holding period, what is which fund category behaves consistently well (or not) against their benchmark

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Methodology

We have taken inspiration from the S&P SPIVA report and have performed analogous analysis for active mutual funds in India for the previous 10 years. We do not claim, and nor should it be inferred, that our analysis will give the same results as the SPIVA report for the same period.

We will follow this process regarding gathering data and analysing:

Data sourcing

  • NAV data: AMFI website for historical NAVs
  • Index data: niftyindices.com for historical index return
  • Fund benchmarks are taken from respective AMC sites

Performing analysis

  • All fund plans are Direct-Growth plans
  • Benchmarks are chosen as the fund benchmark as per the latest factsheet
  • Only active funds are included. We have excluded index funds
  • Market data is for 31-Dec-2023
  • This result is a point-to-point return. Rolling returns present a truer picture of the real trends in the market
  • Benchmarks chosen for fund categories are as follows:
Category Benchmark
Large & Mid Cap Nifty LargeMidcap 250 TRI
Flexi Cap Nifty 500 TRI
Large Cap Nifty 100 TRI
Mid Cap Nifty Midcap 150 TRI
Small Cap Nifty Smallcap 250 TRI
ELSS Nifty 500 TRI

Only the above fund categories are analysed.

We would like to point out that of all the fund categories, the Flexi cap category is the hardest to benchmark correctly. For example, some Flexi cap funds invest in international stocks along with domestic stocks. A better benchmark for such a fund will be a blended index with both Indian and international stocks.

We have adjusted for survivorship bias by assuming that all funds that existed in the past and do not exist today (by either merger or discontinuation) have not beaten the benchmark.

Results of the analysis

In each period below, we have shown a simple count of all funds in that category which have beaten or not beaten the respective benchmark index. For example, in the 1-year returns, this table means:

Category Total Beaten Beaten % Not Beaten Not Beaten %
Large & Mid Cap 29 10 34% 19 66%

There are 29 funds in the Large & Mid Cap category at the beginning of the period. Of these funds, 10 funds have a higher return than the benchmark Nifty LargeMidcap 250 TRI index. So, 10/29 = 34% of funds have beaten the benchmark and the other 66% have not. The “not beaten” category includes funds merged or discontinued in this period. This choice adjusts for survivorship bias.

Before you proceed further, please remember that:

Past performance has no relationship with future returns. Please read all scheme related documents carefully before investing.

1-year returns

Category Total Beaten Beaten % Not Beaten Not Beaten %
Large & Mid Cap 29 10 34% 19 66%
Flexi Cap 33 23 70% 10 30%
Large Cap 32 28 88% 4 13%
Mid Cap 30 5 17% 25 83%
Small Cap 25 6 24% 19 76%
ELSS 33 23 70% 10 30%
Total 182 95 52% 87 48%

3-year returns

Category Total Beaten Beaten % Not Beaten Not Beaten %
Large & Mid Cap 30 10 33% 20 67%
Flexi Cap 25 9 36% 16 64%
Large Cap 33 15 45% 18 55%
Mid Cap 25 6 24% 19 76%
Small Cap 22 11 50% 11 50%
ELSS 32 17 53% 15 47%
Total 167 68 41% 99 59%

5-year returns

Category Total Beaten Beaten % Not Beaten Not Beaten %
Large & Mid Cap 25 8 32% 17 68%
Flexi Cap 24 11 46% 13 54%
Large Cap 32 14 44% 18 56%
Mid Cap 24 10 42% 14 58%
Small Cap 17 15 88% 2 12%
ELSS 31 15 48% 16 52%
Total 153 73 48% 80 52%

10-year returns

Category Total Beaten Beaten % Not Beaten Not Beaten %
Large & Mid Cap 17 4 24% 13 76%
Flexi Cap 14 9 64% 5 36%
Large Cap 29 14 48% 15 52%
Mid Cap 18 4 22% 14 78%
Small Cap 9 7 78% 2 22%
ELSS 26 13 50% 13 50%
Total 113 51 45% 62 55%

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This post titled Arthgyaan India Active Fund Scorecard (Dec-2023) first appeared on 19 Feb 2024 at https://arthgyaan.com


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