« What is Deposit Insurance and How Does it Protect Your Money? How much money has been made by investing in the Public Provident Fund (PPF)? »

Do the worst performing equity mutual funds beat FD?

Posted on 18 Oct 2023 • Updated on: 17 Jun 2024
Author: Sayan Sircar

Tags: Mutual Funds ; Fixed Deposit

10 mins read
📢Join 3500+ readers on WhatsApp and get new post notifications!

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

Do the worst performing equity mutual funds beat FD?

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.

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

Did you know that we have a private Facebook group which you can join for free and ask your own questions? Please click the button below to join.

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.

Also read
How to budget, save and invest in a stress-free manner?

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

What's next? You can join the Arthgyaan WhatsApp community

You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.

For resident Indians 🇮🇳:

For NRIs 🇺🇸🇬🇧🇪🇺🇦🇺🇦🇪🇸🇬:

Share on WhatsApp:

To understand how this article can help you:

If you have a comment or question about this article

The following button will open a form with the link of this page populated for context:

If you liked this article, please leave us a rating

The following button will take you to Trustpilot:

Discover an article from the archives

Previous and next articles:

<p>This article explains the concept of Deposit insurance that protects bank depositors from losing their money, up to a certain amount, if a bank fails.</p>

Review

What is Deposit Insurance and How Does it Protect Your Money?

This article explains the concept of Deposit insurance that protects bank depositors from losing their money, up to a certain amount, if a bank fails.

Published: 15 October 2023

9 MIN READ

<p>This article shows the maturity amount of investing in the Public Provident Fund (PPF) for 15 years as per historical interest rates.</p>

Choosing Investments

How much money has been made by investing in the Public Provident Fund (PPF)?

This article shows the maturity amount of investing in the Public Provident Fund (PPF) for 15 years as per historical interest rates.

Published: 22 October 2023

2 MIN READ

Latest articles:

<p>This article simplifies compliance for US, Canada, UK, and Australia-based NRIs, covering FBAR, FATCA, PFIC, and T1135 requirements.</p>

NRI Tax

What NRIs Must Do With Indian Investments Before the Year-End? PFIC, FATCA, DTAA and ITR rules Simplified

This article simplifies compliance for US, Canada, UK, and Australia-based NRIs, covering FBAR, FATCA, PFIC, and T1135 requirements.

Published: 18 December 2024

6 MIN READ

<p>This article explains the basics of SEBI’s new Specialised Investment Funds which offer advanced strategies that mutual funds cannot and is suitable for investors below the PMS ₹50 lakhs threshold.</p>

FAQ News

Frequently asked questions (FAQs) on SEBI's new Specialised Investment Funds (SIF) which sit in between Mutual Funds and PMS

This article explains the basics of SEBI’s new Specialised Investment Funds which offer advanced strategies that mutual funds cannot and is suitable for investors below the PMS ₹50 lakhs threshold.

Published: 17 December 2024

1 MIN READ

Topics you will like:

Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself.

Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.

Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.

Arthgyaan

Supporting everyone's personal finance journey