These are the worst mutual funds over the last six years!

/ M. Pattabiraman / @pattufreefincal / 7 Comments

Published: October 16, 2019 at 9:59 am

These are the worst mutual fund performers in 2019 based on their performance over the last five years against a category benchmark. The Oct 2019 Equity Mutual Fund Performance Screener can be used to identify the best mutual fund performers in under a minute! If we define “the best” as the most consistent performers in terms of both returns (higher than benchmark) and risk (lower than benchmark), then “the worst” also gets automatically defined as the very opposite.

We label them as the worst as they have a poor record of beating the category benchmark over every possible five, four, three and two year periods since Jan 1st 2013 (since the inception of direct plans).

Some caveats: (1)The category benchmark used is admittedly tough and may not always be appropriate for individual funds. However, tough standards are to be set for a mutual fund industry that has high expenses – one of the highest in the world according to a Morningstar study

(2) A fund labelled as the worst here does not warrant outright rejection. Closer inspection of its performance (with its benchmark) and category peers, taking into account its investment mandate history is necessary before an investment decision is made.

(3) All the fund in this list has a star rating at Value Research. This means, their investment mandate history has not been affected too drastically by the SEBI categorisation rules. In other words, studying its past is justified.

(4) Categories like ELSS, Div Yield, Value-oriented, sectoral, thematic and Agg-Hybrid were not considered as that might be a touch harsh.

(5) We have considered funds with a minimum of 400 five year return periods. This means the funds were stated on or before mid-2013

List of fund categories considered for “worst” ranking

CategoryBenchmark
Focussed FundNifty Largemidcap 250 TRI
Large & Mid Cap FundNifty Largemidcap 250 TRI
Large Cap FundNifty 100 TRI
Mid Cap FundNiftyMidcap150TRI
Multi-Cap FundNifty Largemidcap 250 TRI
Small Cap FundNiftyMidcap150TRI

Definition of a worst mutual fund

Subject to the caveats mentioned above, a fund that fails to beat the category benchmark more than half the all possible 5 and 4 and 3 and 2-year returns is labelled as worst.

Let us consider an example. HDFC Equity Fund benchmarked against Nifty Largemidcap 250 TRI. Notice how poorly the fund has fared. Detailed review is here: HDFC Equity Fund Review: Is this still good or should I avoid?

HDFC Equity Fund Rolling Return Performance

For some durations, there is a considerable spread in performance, but this has not been factored in. You can use the screener to dig deeper if you wish. For example, over five year periods, a fund that has beaten the category benchmark 44% of the time and a fund that has never outperformed are both labelled as the worst. As an analyst, this is perhaps harsh, but we must think as investors here.

Let us now list the worst performers classified by category. Note: Reliance AMC is now Nippon India AMC. 

Focussed Funds (7/17)

Here 7/17 refers to 7 funds labelled as worst out of a total of 17 funds.

  1. DSP Focus Fund
  2. Aditya Birla Sun Life Focused Equity Fund
  3. HDFC Focused 30 Fund
  4. ICICI Prudential Focused Equity Fund
  5. IDFC Focused Equity Fund
  6. Principal Focused Multicap Fund
  7. Sundaram Select Focus

Large and Midcap Funds (7/22)

  1. Tata Large & Mid Cap Fund
  2. L&T Large and Midcap Fund
  3. Franklin India Equity Advantage Fund
  4. BOI AXA Large & Mid Cap Equity Fund
  5. ICICI Prudential Large & Mid Cap Fund
  6. Reliance (Nippon India) Vision Fund Plan
  7. UTI Core Equity Fund

Large Cap Funds (6/28)

  1. Baroda Large cap Fund Plan B
  2. LIC MF Large Cap Fund
  3. JM Large Cap Fund
  4. DSP Top 100 Equity Fund
  5. IDFC Large Cap Fund
  6. Taurus Largecap Equity Fund

Midcap Funds (5/21)

  1. SBI Magnum MIDCAP FUND
  2. BNP Paribas Mid Cap Fund
  3. Taurus Discovery (Midcap) Fund
  4. Aditya Birla Sun Life Midcap Fund
  5. Reliance (Nippon India) Growth Fund

Multicap Funds (12/34)

  1. HSBC Multicap Equity Fund
  2. DSP Equity Fund
  3. HDFC Equity Fund
  4. Reliance Multi Cap Fund Plan
  5. BARODA MULTI CAP FUND Plan B
  6. Canara Robeco Equity Diversified Fund
  7. L&T Equity Fund
  8. LIC MF Multicap Fund
  9. SBI Magnum Multicap Fund
  10. Taurus Starshare (Multi Cap) Fund
  11. Union Multicap Fund
  12. UTI Equity Fund

Smallcap Funds

  1. ICICI Prudential Smallcap Fund

This was earlier an Indo-Asia fund but had a good correlation with the smallcap index (hence rated by VR). So do dig deeper if you are invested or interested.

Find the best performers using the Oct 2019 Equity Mutual Fund Performance Screener

What to do if you are invested in these funds?

The above listing of worst mutual fund performers should be treated as a reminder to dig deeper. These funds may have delivered a satisfactory performance to some/many investors (depending on when they started). Please evaluate the performance of the fund with its benchmark over the last few years. If it did not beat the benchmark over the previous 3,4,5 years, ditch the fund in full and invest elsewhere. Here, ditch in full means, stop investing and redeem all units and move on. This may be of help: Review your mutual funds in three simple steps! This is the video version.

https://www.youtube.com/watch?v=H5WHKx1MgvM
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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
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