48% of equity MFs outperform benchmarks in Sept 2024, small-cap funds lead

In total, out of 284 equity mutual funds analyzed, 137 (or 48%) outperformed their respective benchmarks in September 2024.

Nearly half of equity mutual funds outperformed their benchmarks in September 2024, revealed a new report by Prabhudas Lilaldhar Wealth Management.

Findings

The study, which analyzed 287 open-ended equity diversified funds, found that 48% of these funds exceeded their respective benchmarks during September. This means that 137 funds delivered better returns than expected, a notable achievement for investors looking for growth.

Among the different types of equity funds, small cap funds stood out as the best performers. In this category,  75% of the funds outperformed their benchmarks.

It was followed by schemes of Mid Cap Funds and Flexi Cap Fund which outperformed their respective benchmarks by 66% and 51%, respectively during September 2024.

 

Value Contra Div. Yield Funds were the least performing fund category with only 19% of funds outperforming the benchmark.

Growth in Assets

The report also highlighted a growth in the assets under management (AUM) of equity mutual funds. AUM rose by 3.10%, increasing from Rs 25,64,069 crore in August 2024 to Rs 26,43,291 crore in September 2024. This growth suggests that more investors are putting their money into equity mutual funds, likely driven by the favorable performance of these funds.

"Investors are advised to stick to their SIP investments and keep a long-term focus. SIPs over the past 3-years have yielded a return in excess of 15% p.a. on an average for the top quartile equity funds," said Pankaj Shrestha Head - Investment Services at PL Capital. 

In the report, different categories of mutual funds are analyzed based on their performance against relevant benchmarks. 

No. of Schemes Outperforming The Benchmark

1. Multicap Funds (50:25:25 - TRI)

Total Funds: 26

Funds Outperforming: 13

Percentage Outperforming: 50%

Multicap funds invest in large, mid, and small-cap stocks. Out of 26 funds, half (13) performed better than their benchmark index.

2. Flexi Cap Funds (NIFTY 500 - TRI)

Total Funds: 39

Funds Outperforming: 20

Percentage Outperforming: 51%

 Flexi cap funds can adjust their investment across different market caps. More than half of these funds (20 out of 39) outperformed the NIFTY 500 index.

3. Mid Cap Funds (Nifty Midcap 150 - TRI)

Total Funds: 29

Funds Outperforming: 19

Percentage Outperforming: 66%

 Mid cap funds focus on mid-sized companies. At least 66% of these funds beat their benchmark index.

4. Small Cap Funds (Nifty Smallcap 250 - TRI)

Total Funds: 28

Funds Outperforming: 21

Percentage Outperforming: 75%

 Small cap funds invest in smaller companies. 75% of these funds performed better than their benchmark.

5. Focused Funds (NIFTY 500 - TRI)

Total Funds: 28

Funds Outperforming: 14

Percentage Outperforming: 50%

 Focused funds invest in a limited number of stocks, often leading to higher risks and potential rewards. Half of these funds outperformed their benchmark.

6. Value and Dividend Yield Funds (NIFTY 500 - TRI)

Total Funds: 32

Funds Outperforming: 6

Percentage Outperforming: 19%

 Value funds look for undervalued stocks, while dividend yield funds focus on stocks that pay dividends. Only 19% of these funds beat their benchmark.

7. Equity Linked Savings Schemes (NIFTY 500 - TRI)

Total Funds: 41

Funds Outperforming: 18

Percentage Outperforming: 44%

 These schemes provide tax benefits to investors. Less than half (44%) performed better than their benchmark.