Is your mutual fund justified for the expenses it charges you?
A recent SEBI consultation paper quotes an internal study it conducted, which showed a wide range of underperformance by mutual fund schemes versus their benchmarks. That’s what led SEBI to propose performance-linked fee. A Moneycontrol analysis made a similar finding. Just 47 percent of the schemes (regular plans) have outperformed their benchmark indices over the past 10 years
On May 18, 2023, the capital market regulator, Securities and Exchange Board of India (SEBI) issued a consultation paper that proposed performance-linked fee for mutual fund schemes. In recent years, it has got tougher for actively-managed equity funds to outperform their benchmark indices. Meanwhile, the passive funds’ market has grown in size and popularity. SEBI has now proposed that if funds underperform, fund houses will have to forgo their management fees that they earn from investors. On the back of this, Moneycontrol takes a look at 5-year and 10-year performance of India’s 15 largest fund houses and analyses which schemes have outperformed and which ones have underperformed their respective benchmark indices (see below graphs). Data compiled from ACEMF shows that just 47 percent of the schemes (regular plans) have outperformed their benchmark indices over the past 10 years. Over the last 5 years, just 38 percent of schemes (regular plans) have outperformed their benchmark indices.
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SBI Mutual Fund Average AUM: Rs 7.2 Trillion Sample of schemes that outperformed the respective benchmarks over the last five and ten years: SBI Small Cap, SBI Contra and SBI Technology Opportunities Fund.
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ICICI Prudential Mutual Fund Average AUM: Rs 5 Trillion Sample of schemes that outperformed the respective benchmarks over the last five and ten years: ICICI Pru Smallcap, ICICI Pru Technology and ICICI Pru Value Discovery Fund.
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HDFC Mutual Fund Average AUM: Rs 4.5 Trillion Sample of schemes that outperformed the respective benchmarks over the last five and ten years: HDFC Small Cap, HDFC Flexi Cap and HDFC Hybrid Equity Fund.
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Nippon India Mutual Fund Average AUM: Rs 2.9 Trillion Sample of schemes that outperformed the respective benchmarks over the last five and ten years: Nippon India Small Cap, Nippon India Multi Cap and Nippon India Pharma Fund
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Kotak Mutual Fund Average AUM: Rs 2.9 Trillion Sample of schemes that outperformed the respective benchmarks over the last five and ten years: Kotak Small Cap, Kotak Tax Saver and Kotak Infra & Eco Reform Fund
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Aditya Birla SL Mutual Fund Average AUM: Rs 2.8 Trillion Schemes that outperformed the respective benchmarks over the last five and ten years: Aditya Birla SL Digital India and Aditya Birla SL India GenNext Fund
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Axis Mutual Fund Average AUM: Rs 2.4 Trillion Schemes that outperformed the respective benchmarks over the last five and ten years: Axis Small Cap and Axis Midcap Fund
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UTI Mutual Fund Average AUM: Rs 2.4 Trillion Scheme that outperformed the respective benchmark over the last five and ten years: UTI Healthcare Fund
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Bandhan Mutual Fund Average AUM: Rs 1.2 Trillion Scheme that outperformed the respective benchmark over the last five and ten years: Bandhan Tax Advantage (ELSS) Fund
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Mirae Asset Mutual Fund Average AUM: Rs 1.2 Trillion Schemes that outperformed the respective benchmarks over the last five and ten years: Mirae Asset Great Consumer, Mirae Asset Tax Saver and Mirae Asset Emerging Bluechip Fund
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DSP Mutual Fund Average AUM: Rs 1.1 Trillion Sample of schemes that outperformed the respective benchmarks over the last five and ten years: DSP Natural Res & New Energy, DSP Small Cap and DSP Tax Saver Fund
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Edelweiss Mutual Fund Average AUM: Rs one Trillion Scheme that outperformed the respective benchmarks over the last five and ten years: Edelweiss Aggressive Hybrid Fund
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Tata Mutual Fund Average AUM: Rs one Trillion Scheme that outperformed the respective benchmark over the last five and ten years: Tata Infrastructure
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HSBC Mutual Fund Average AUM: Rs 0.8 Trillion Scheme that outperformed the respective benchmark over the last five years: HSBC Small Cap Fund
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Franklin Templeton Mutual Fund Average AUM: Rs 0.6 Trillion Sample of schemes that outperformed the respective benchmarks over the last five and ten years: Templeton India Value, Templeton India Equity Income, Franklin Build India and Franklin India Smaller Cos Fund
