The report notes that survivorship rate for equity funds remains the lowest among all categories.
According to the latest CRISIL report, over 53% of actively managed equity funds underperformed their benchmarks over the last five years, 57.14% over the last three years and 52.63% over the last year. On the other hand, majority of active managers of debt oriented hybrid funds or Monthly Income Plans (MIPs) outperformed the benchmark CRISIL MIP Blended Fund Index over the 3- and 5-year time frames.
The report highlights that over 53% of diversified funds outperformed the benchmark S&P CNX 500 in the 1 year period ending June 2012. This number increased to 62% in the 3 year period but again dropped to 49.5% in the 5 year period. A similar trend is noted for ELSS (Equity Savings Linked Scheme) schemes, where the percentage of funds outperforming the benchmark in both the 1 year and 3 year period is stable at about 70% but drops significantly to 45% in the 5 year period.
“The mutual fund industry in India through the past few months has been undergoing multiple changes given various regulatory announcements and the rather flat capital markets. Given the environment, the number of new launches has been low and the mutual funds have been in a consolidation phase. Of the different fund categories, the survivorship has been the lowest when it comes to diversified equity funds across categories and time whereas balanced funds, hybrid funds, gilt funds and debt funds had a 100% survivorship in the one year period,” says Jiju Vidyadharan, Director, Funds & Fixed Income Research, CRISIL Research.
“Active managers of equity oriented hybrid funds have also fallen behind benchmarks over both 1- and 5-year time frames. In contrast, the majority of active managers of debt oriented hybrid funds or Monthly Income Plans (MIPs) outperformed the benchmark CRISIL MIP Blended Fund Index over the 3- and 5-year time frames. In the one year period ending June 2012, the majority of gilt and balanced funds underperformed, while the majority of debt, ELSS and diversified funds beat their benchmarks,” states the report.
