90% of schemes in midcap category fare better than their benchmarks

Investors putting money in actively-managed mutual fund (MF) schemes are likely to have seen less wealth erosion than those who have switched to index-linked ‘passively’ managed schemes. Passive funds gained popularity as fund managers under-performed index returns last year, Sample this: 94 per cent of large-cap schemes have fallen less than their benchmark indices over 3-month period, data sourced from Morningstar shows. About 90 per cent of the schemes in the midcap category have fared better than their benchmarks. But, in the case of small-cap schemes the share is down at 73 per cent, with 17 of the 23 schemes in the category having fallen less than their benchmarks. In the past three months, the Sensex is down 30 per cent, the BSE Midcap and BSE Smallcap have fallen 24 per cent apiece.

 

The data points out the relevance of active fund management, which had come under question in the past few years given the failure of most schemes to beat benchmark returns.

Source: Morningstar

“This re-iterates our stance that in Indian markets, active fund management has an important role to play. Even during past bull markets, we have seen actively-managed funds slightly underperform indices and fall less than their benchmarks during the bearish phase,” said Kaustubh Belapurkar, director (fund research) at Morningstar Investment.

Across large-cap, mid- and small-caps, 87 per cent of the schemes have fallen less than their benchmarks.