There has been reports floating around media including social media questioning the efficacy and very existence of actively managed funds. Most of them are either not well researched or rhetorical and in worst cases can be motivated.
Most of these reports cite global trends as the rationale for their claims. They say that since this has happened in the US and western world, India will be no different. I do not know if this will happen in India going forward but what has happened globally does not necessarily mean that it should happen in India.
The past data indicates a different picture. Here is the performance of mid cap funds and small cap funds compared with BSE Mid-Cap TRI and BSE Small-Cap TRI respectively.
Performance of Mid Cap Schemes against BSE Mid-Cap TRI
|
Returns (CAGR) of all mid cap schemes as on 30 June 2019 |
|||||
|
Schemes |
AUM (Rs. Crores) |
1 Year |
3 Years |
5 Years |
10 Years |
|
S&P BSE Mid-Cap - TRI |
|
-3.14 |
9.27 |
10.84 |
12.78 |
|
Aditya Birla SL Midcap Fund(G) |
2,434 |
-4.83 |
7.20 |
11.12 |
14.40 |
|
Axis Midcap Fund(G) |
2,549 |
8.17 |
13.51 |
12.46 |
|
|
Baroda Mid-cap Fund(G) |
48 |
-3.88 |
8.66 |
-0.55 |
|
|
BNP Paribas Mid Cap Fund(G) |
764 |
1.76 |
6.70 |
11.48 |
18.19 |
|
DHFL Pramerica Midcap Opp Fund-Reg(G) |
124 |
-6.46 |
5.76 |
7.43 |
|
|
DSP Midcap Fund-Reg(G) |
6,320 |
3.63 |
10.35 |
13.32 |
18.24 |
|
Edelweiss Mid Cap Fund-Reg(G) |
918 |
-2.16 |
10.34 |
13.15 |
18.27 |
|
Franklin India Prima Fund(G) |
7,148 |
2.33 |
9.39 |
14.01 |
18.48 |
|
HDFC Mid-Cap Opportunities Fund(G) |
22,825 |
-0.93 |
10.55 |
13.20 |
19.81 |
|
ICICI Pru Midcap Fund(G) |
1,765 |
0.95 |
10.18 |
11.78 |
16.05 |
|
IDBI Midcap Fund(G) |
215 |
-5.87 |
|
|
|
|
Invesco India Midcap Fund(G) |
415 |
3.69 |
10.77 |
12.84 |
19.25 |
|
Kotak Emerging Equity Scheme(G) |
4,326 |
3.08 |
10.62 |
16.22 |
17.71 |
|
L&T Midcap Fund-Reg(G) |
4,880 |
-2.65 |
12.28 |
15.01 |
17.50 |
|
Mahindra Unnati Emerging Business Yojana-Reg(G) |
486 |
-0.13 |
|
|
|
|
Motilal Oswal Midcap 30 Fund-Reg(G) |
1,437 |
-0.66 |
6.01 |
12.40 |
|
|
Quant Mid Cap Fund(G) |
12 |
-2.34 |
5.70 |
8.37 |
8.09 |
|
Reliance Growth Fund(G) |
6,858 |
6.51 |
11.26 |
11.38 |
13.25 |
|
Sahara Midcap Fund(G) |
8 |
5.98 |
11.55 |
9.99 |
14.45 |
|
SBI Magnum Midcap Fund-Reg(G) |
3,670 |
0.57 |
3.50 |
11.73 |
15.54 |
|
Sundaram Mid Cap Fund(G) |
6,090 |
-4.72 |
7.92 |
12.25 |
16.93 |
|
Tata Mid Cap Growth Fund(G) |
687 |
10.54 |
11.27 |
13.57 |
16.36 |
|
Taurus Discovery (Midcap) Fund-Reg(G) |
51 |
-3.61 |
11.02 |
12.31 |
13.61 |
|
UTI Mid Cap Fund-Reg(G) |
3,794 |
-4.61 |
5.56 |
11.18 |
17.74 |
|
Total Schemes |
24 |
22 |
22 |
18 |
|
|
No of schemes underperformed |
7 |
9 |
4 |
1 |
|
|
% of underperformed scheme |
29% |
41% |
18% |
6% |
|
|
Total AUM (Rs. In Crores) |
77,824 |
77,123 |
77,123 |
72,965 |
|
|
Amount of AUM underperformed (Rs. In Crores) |
12,756 |
18,372 |
192 |
11.64 |
|
|
% of AUM underperformed |
16% |
24% |
0.25% |
0.02% |
|
It can be deduced from the above data that majority of mid cap schemes have outperformed benchmark. Looking at 10 year returns as on June 2019, we see that only 1 scheme did not beat benchmark but it accounts for a mere 0.02% of the total midcap schemes AUM. In case of 5 year returns, only 4 out of 22 schemes underperformed the benchmark, and their total AUM comprises a mere 0.25% of total AUM of all midcap schemes.
The story of small cap funds is not different either. Here is the performance of all small cap funds compared to the BSE Small Cap TRI.
|
Returns (CAGR) of Small Cap Schemes as on 30 June 2019 |
|||||
|
Schemes |
AUM (Rs. Crores) |
1 Year |
3 Years |
5 Years |
10 Years |
|
S&P BSE Small-Cap - TRI |
|
-10.46 |
7.25 |
7.84 |
10.85 |
|
Aditya Birla SL Small Cap Fund(G) |
2,487 |
-12.99 |
5.92 |
11.20 |
15.74 |
|
Axis Small Cap Fund-Reg(G) |
402 |
11.66 |
11.83 |
13.91 |
|
|
DSP Small Cap Fund-Reg(G) |
5,273 |
-3.56 |
4.99 |
15.14 |
|
|
Franklin India Smaller Cos Fund(G) |
7,577 |
-6.71 |
6.71 |
13.47 |
18.80 |
|
HDFC Small Cap Fund-Reg(G) |
8,403 |
-2.11 |
14.84 |
14.94 |
16.05 |
|
HSBC Small Cap Equity Fund(G) |
779 |
-9.01 |
4.88 |
9.54 |
11.88 |
|
ICICI Pru Smallcap Fund(G) |
316 |
1.97 |
7.78 |
8.39 |
12.88 |
|
IDBI Small Cap Fund(G) |
156 |
-7.25 |
|
|
|
|
Kotak Small Cap Fund(G) |
1,276 |
-3.22 |
7.78 |
12.62 |
16.23 |
|
L&T Emerging Businesses Fund-Reg(G) |
6,177 |
-7.41 |
13.59 |
14.72 |
|
|
Quant Small Cap Fund(G) |
2 |
-10.75 |
-0.44 |
3.44 |
7.93 |
|
Reliance Small Cap Fund(G) |
8,438 |
-4.14 |
12.97 |
15.58 |
|
|
SBI Small Cap Fund-Reg(G) |
2,188 |
0.90 |
14.86 |
20.96 |
|
|
Sundaram Small Cap Fund(G) |
1,196 |
-8.88 |
3.61 |
9.76 |
13.75 |
|
Union Small Cap Fund(G) |
326 |
-7.97 |
2.59 |
5.41 |
|
|
Total Schemes |
15 |
14 |
14 |
8 |
|
|
No of schemes underperformed |
2 |
7 |
2 |
1 |
|
|
% of underperformed scheme |
13% |
50% |
14% |
13% |
|
|
Total AUM (in Rs. crore) |
44,997 |
44,841 |
44,841 |
22,037 |
|
|
Amount of AUM underperformed |
2,489 |
16,861 |
328 |
2 |
|
|
% of AUM underperformed |
6% |
38% |
0.73% |
0.01% |
|
The above two tables depict that less than 1% (10 year and 5 year CAGR) of the total mid and small cap AUM has underperformed the BSE Mid Cap TRI and Small Cap TRI. This only shows that both mid and small cap mutual funds have consistently outperformed their benchmarks over long term.
Vijai Mantri is the Chief Investment Strategist and Co-Promoter of JRL Money. The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.