We have been publishing a monthly equity mutual fund screener since Sep 2022. This uses rolling returns to determine how consistently active mutual funds outperform representative category benchmarks. This can also be used to appreciate how hard it is for active funds to outperform and why passive funds make sense – especially if you are a beginner. Old relics like me have a portfolio that summarises all past mistakes.
Take, for example, the Feb 2025 screener. We have a total of 403 mutual funds across several categories. Some categories have multiple benchmarks.
| Category | Benchmark |
| Aggressive Hybrid Fund | Nifty 100 TRI, CRISIL 65:35 Aggressive Hybrid Index, NIfty 100 Low Volatility 30 TRI |
| Contra Fund | Nifty 100 TRI, NIfty 100 Low Volatility 30 TRI |
| Dividend Yield Fund | Nifty 100 TRI, NIfty 100 Low Volatility 30 TRI |
| Large Cap Fund | Nifty 100 TRI, NIfty 100 Low Volatility 30 TRI |
| ELSS | Nifty 100 TRI |
| Focussed Fund | Nifty Largemidcap 250 TRI, N200TRI |
| Large & Mid Cap Fund | Nifty Largemidcap 250 TRI, N200TRI |
| Multi-Cap Fund | Nifty Largemidcap 250 TRI, N200TRI |
| Flexi-Cap Fund | NIFTY 500 Multicap 50:25:25 TRI, Nifty Largemidcap 250 TRI, N200TRI |
| Sectoral/ Thematic | Nifty Largemidcap 250 TRI, NIfty 100 Low Volatility 30 TRI |
| Value Fund | Nifty Largemidcap 250 TRI, NIfty 100 Low Volatility 30 TRI |
| Mid Cap Fund | NiftyMidcap150TRI, Nifty Midcap 150 Quality 30 TRI |
| Small Cap Fund | NiftyMidcap150TRI, Nifty Midcap 150 Quality 30 TRI, Nifty Smallcap 250 Quality 50 TRI |
The main metric used is Rolling return outperformance consistency: the fund returns are compared with category benchmark returns over every possible 1Y,2Y,3Y,4Y, and 5Y period. The higher the outperformance consistency, the better. Suppose 876 fund returns were compared with 876 benchmark returns, and the fund has beaten the benchmark 675 times. The consistency score will be 675/876 ~ 77%.
If we now ask, how many mutual funds had a rolling return outperformance consistency of 70% or more over 5 years. We only have 140 equity funds across all categories. So 140/403 is just 34% of active equity funds. That should be enough to convince you to keep it simple and be a passive investor!
You can also screen for funds with higher than benchmark trailing returns with lower trailing risk. The number of such funds over the last 1,2,3,4, and 5 years is just 29!
🔥Secure your future with our Robo-advisory tool trusted by over 3,500 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
Subscribe for money management solutions via email! (Link takes you to our email sign-up form) Join 32,000+ readers in our community.
👉 New Tool Alert! NaviPlan: A Privacy-Focused Multi-asset Tracker and Goal Planner 👈
You can choose active funds if you like them but ensure (1) you have a proper investment strategy and (2) don’t be so sure your funds (or active funds in general) will outperform the market! See: The “active vs passive” debate is not of primary importance in portfolio management.