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Only 6 out of 192 equity mutual funds gave double-digit 5-year SIP returns

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Equity mutual funds have not shown their best performance for some time. Mutual fund investors have been complaining of unexpectedly lower returns from equity funds for over two years now. Long term SIP returns are also considerably down. Most equity fund SIPs have delivered single digit annualised returns in five-year period. Only six equity mutual fund schemes managed to generate double-digit returns in the same period.

We have considered a tenure of five years as SIP in equity funds are recommended for a minimum period of five years. 192 schemes include all equity funds except sectoral and thematic schemes, which have completed five years.

The six schemes that managed to deliver double digit annualised returns are- Parag Parikh Long Term Equity Fund (12.89%), Axis Bluechip Fund (10.93%), IIFL Focused Equity Fund (10.92%), Axis Midcap Fund (10.56%), Mirae Asset Emerging Bluechip Fund (10.56%) and Canara Robeco Bluechip Equity Fund (10.42%).

We have assumed five-year SIP returns under direct plan of the schemes. The data was sourced from Value Research and the returns are as on July 19.

Average 5-year SIP return of large cap mutual funds stood at 5.38%. Top three schemes in the category are Axis Bluechip Fund, Canara Robeco Bluechip Fund and BNP Paribas Large Cap Fund. Their five-year SIP returns stood at 10.93%, 10.42% and 7.75% respectively.

Large & Mid cap category gave an average return of 4.30%. The five-year SIP toppers are Mirae Asset Emerging Bluechip Fund (10.56%), Quant Large and Mid Cap Fund (7.76%) and Canara Robeco Emerging Equities Fund (7.47%).

Mid cap toppers are Axis Midcap Fund (10.56%), DSP MidcapFund (7.22%) and Invesco India Mid Cap Fund (7.12%). Average return generated by the mid cap funds in the last five years was 3.37%. 15 out of 21 schemes gave negative returns.

Multi cap mutual funds gave an average return of 4.74%. The toppers include- PPFAS Long Term Equity Fund, IIFL Focused Equity Fund and Axis Focused 25 Fund (9.36%).

Small cap funds were the worst hit. 10 out of 14 small cap funds delivered negative 5-yr SIP returns. The outliers were Axis Small Cap Fund (7.34%), SBI Small Cap Fund (7.06%).

Should you worry?

Low returns at this point is the cause of worry for those who have their goals approaching. That is why financial planners suggest to start moving out of equities 2-3 years before your goal and freeze the returns gradually.

Investors who have a long time to reach their goal should not worry. Mutual fund advisors ask them to continue with their SIPs as they will buy more units at cheaper rates now. And once markets resume their upward movement, returns will be visible.

Also, these are point to point returns which do not give you a complete picture of a scheme’s long term performance. Do not make any decision solely on the basis of these returns. Consult your financial planner before making any move.

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