This article explores if the worst performing equity mutual funds have beat FD and RD returns.

Disclaimer: Mutual funds names in the article are not recommendations to invest in those funds. Infact given that these funds are the worst performers historically, no rational investor should invest in them.

📚 Table of Contents

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• Why compare FDs and mutual funds?
• FD rates pre and post tax
• Equity mutual funds and their taxation
• Worst SIP vs. FD
  • Worst 3 year Lumpsum vs. FD
  • Worst 5 year Lumpsum vs. FD
  • Worst 10 year Lumpsum vs. FD
• Worst SIP vs. RD
  • Worst 3 year SIP vs. RD
  • Worst 5 year SIP vs. RD
  • Worst 10 year SIP vs. RD
• Caveats with this analysis

Why compare FDs and mutual funds?

A very common comparison that investors look for and see from many sales pitches is the FD vs. mutual fund debate. This is a classic apples to oranges comparison that we have ourselves covered here: Mutual Fund vs Fixed Deposit - where should you invest?.

A recent take on this debate says: “Did you know that even the worst performing equity mutual funds has beaten FD. Imagine what the best performing MF has done.” We will now examine the claim of worst-FD vs equity mutual funds.

FD rates pre and post tax

We are taking the example of FD rates from the SBI website and have calculated the after tax returns in the 30% tax bracket. We have chosen SBI since it is one of the safest banks in India and forms the basis of comparing against other investments.

The table below shows the historical 3,5 and 10Y FD/RD rates from the SBI website as on 13-Oct-2023. The actual FD returns, if you adjust for the tax you need to pay every year, will be slightly less than the post-tax figures in the table below.

SBI FD Rates	Rate announced on	Pre-tax	Post Tax (30%)
3Y	10-Sep-2020	5.30	3.95
5Y	30-Jul-2018	6.85	5.19
10Y	01-Mar-2013	8.75	6.74

Equity mutual funds and their taxation

We have taken data from Valueresearchonline for 13-Oct-2023 for all equity mutual fund categories except international and thematic / sector funds.

Taxation of equity mutual funds is taken as per the latest rate of 10% tax on profits for after being held longer than 1 year.

Worst SIP vs. FD

Worst 3 year Lumpsum vs. FD

Fund name	3Y Lumpsum %	3Y after-tax %
SBI 3-Y FD	5.30	3.95
Nippon India ETF Nifty 50 Shariah BeES	8.57	7.77
Axis Focused Fund	9.10	8.26
UTI Flexi Cap Fund	9.48	8.60
Axis ELSS Tax Saver Fund	11.96	10.88
Mirae Asset Focused Fund	12.09	11.00
Axis Bluechip Fund	12.36	11.24
Aditya Birla Sun Life ELSS Tax Saver	13.09	11.91
PGIM India Large Cap Fund	13.16	11.98
Franklin India Bluechip Fund	13.76	12.53
Taurus Nifty 50 Index Fund	14.18	12.92

Worst 5 year Lumpsum vs. FD

Fund name	5Y Lumpsum %	5Y after-tax %
SBI 5-Y FD	6.85	5.19
Aditya Birla Sun Life ELSS Tax Saver	13.87	12.76
Axis Focused Fund	14.03	12.91
Nippon India ETF Nifty 50 Shariah BeES	14.57	13.42
Aditya Birla Sun Life Retirement Fund	14.75	13.59
Aditya Birla Sun Life Bal Bhavishya Yojna	14.83	13.66
Taurus Flexi Cap Fund	14.87	13.70
PGIM India Large Cap Fund	14.98	13.80
LIC MF BSE Sensex Index Plan	15.19	14.00
Tata S&P BSE Sensex Index Fund	15.21	14.02
Bandhan S&P BSE Sensex ETF	15.24	14.04

Worst 10 year Lumpsum vs. FD

Fund name	10Y Lumpsum %	10Y after-tax %
SBI 10-Y FD	8.75	6.74
Taurus Flexi Cap Fund	11.51	10.75
Nippon India ETF Nifty 50 Shariah BeES	11.84	11.06
Taurus Large Cap Fund	11.86	11.08
Motilal Oswal Nifty 50 ETF Fund	12.10	11.31
LIC MF BSE Sensex Index Plan	12.32	11.52
Aditya Birla Sun Life Nifty 50 Index Fund	12.48	11.68
DSP Top 100 Equity Fund	12.61	11.80
Nippon India Index Fund	12.61	11.80
Tata S&P BSE Sensex Index Fund	12.64	11.83
Franklin India NSE Nifty 50 Index	12.65	11.84

Worst SIP vs. RD

Worst 3 year SIP vs. RD

Fund name	3Y SIP %	3Y SIP after-tax%
SBI 3-Y RD	5.30	3.95
Nippon India ETF Nifty 50 Shariah BeES	7.55	6.84
UTI Flexi Cap Fund	8.70	7.89
Mirae Asset Focused Fund	9.98	9.06
Axis Focused Fund	10.96	9.96
PGIM India Flexi Cap Fund	13.81	12.58
Axis Bluechip Fund	13.82	12.59
LIC MF Focused Fund	13.93	12.69
Bandhan S&P BSE Sensex ETF	14.10	12.84
Tata S&P BSE Sensex Index Fund	14.14	12.88
LIC MF BSE Sensex Index Plan	14.16	12.90

Worst 5 year SIP vs. RD

Fund name	5Y SIP %	5Y SIP after-tax%
SBI 5-Y RD	6.85	5.19
Nippon India ETF Nifty 50 Shariah BeES	12.59	11.56
Axis Focused Fund	13.13	12.07
UTI Flexi Cap Fund	14.27	13.14
Axis Bluechip Fund	15.16	13.97
Axis ELSS Tax Saver Fund	15.41	14.20
Aditya Birla Sun Life ELSS Tax Saver	15.77	14.54
Mirae Asset Focused Fund	16.21	14.96
Tata S&P BSE Sensex Index Fund	16.56	15.28
PGIM India Large Cap Fund	16.57	15.29
Bandhan S&P BSE Sensex ETF	16.59	15.31

Worst 10 year SIP vs. RD

Fund name	10Y SIP %	10Y SIP after-tax%
SBI 10-Y RD	8.75	6.74
Nippon India ETF Nifty 50 Shariah BeES	11.79	11.02
Aditya Birla Sun Life ELSS Tax Saver	12.80	11.98
Taurus Flexi Cap Fund	12.80	11.98
LIC MF Flexi Cap Fund	12.94	12.12
Taurus Large Cap Fund	12.96	12.14
Franklin India Bluechip Fund	13.45	12.61
Axis Focused Fund	13.49	12.65
PGIM India Large Cap Fund	13.49	12.65
UTI Flexi Cap Fund	13.54	12.70
LIC MF Large Cap Fund	13.62	12.77

Caveats with this analysis

There are some obvious caveats with the data shown above

• this data is point to point and not rolling. Rolling returns paint a true picture since you can choose the start and end points to prove any point
• it does not make sense to compare a fixed return product with minimal risk like FD with a volatile investment like equity mutual funds. However, this FD vs worst MF comparison is a very common sales pitch used to sell mutual funds and therefore you need to be aware of the risks
• the worst MF list will change the next time this list is prepared and there is no guarantee that FDs will be still beaten by the worst performing MF
• you should not use this analysis for investing 100% in equity mutual funds for any goals less than 10 years. We will cover this particular point in a future article