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Arthgyaan India Active Fund Scorecard (Dec-2023)

Posted on 19 Feb 2024
Author: Sayan Sircar

Tags: Research

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
How many funds have underperformed their benchmarks?
Methodology
- Data sourcing
- Performing analysis
Results of the analysis

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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