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Six major underperforming MF schemes having higher expense ratios

By Shashikant Singh | 12/27/2017 5:03 PM Wednesday

The year 2017 saw benchmark equity indices achieving new milestones. Recently, the equity bellwether index BSE Sensex touched 34,000-mark, and year-to-date, it has gone up by as much as 27%. Barring few sectoral funds such as pharma and IT, the performance of most of the mutual fund's schemes were in line with the performance of equity indices. On an average, diversified equity mutual funds generated returns of 40 % year-to-date (December 22, 2017). 

Nevertheless, there were certain schemes that remained laggards and underperformed their benchmarks this year. These funds have been in existence for a while now, and yet these schemes could not beat the performance of their respective benchmarks.

Here is a list of funds that failed to beat the benchmarks. These funds have higher (above average) expense ratios and are managing funds 1.5 times larger than median size of equity diversified funds.

UTI Wealth Builder Fund-Retail Plan

Expense Ratio: 2.56 % (November 30, 2017), One Year Return: 18.68% (December 22, 2017), Net Assets: Rs 971.37 crore (November 30, 2017)

This fund has generated a return of just 16.73% year-to-date, as compared to 30.96% given by its benchmark BSE 100. This year’s bad performance has led to scheme’s underperformance even over the longer term of 5 years, wherein it generated a return of a mere 7.62% against 13.19% by its benchmark. Despite the fund managing assets of more than Rs 970 crore, its expense ratio is as high as 2.56%.  

JM Equity Fund

Expense Ratio: 2.35% (November 30, 2017), One Year Return: 20.57% (December 22, 2017), Net Assets: Rs 5830 crore (November 30, 2017)

This fund has generated a return of 20.57% year-to-date, as compared to 32.57% given by its benchmark S&P BSE Sensex. The fund holds a portfolio of only large-cap stocks. In the longer term of 5 years, the fund has marginally beaten its benchmark. At the end of November 2017, the total assets under the management of the fund were Rs 5830 crore.

 

ICICI Prudential Value Discovery Fund

Expense Ratio: 2.11 % (November 30, 2017), One Year Return: 25.30% (December 22, 2017), Net Assets: Rs 17188 crore (November 30, 2017)

This fund in the last one year has given a return of 25.3% compared to 35.08% given by its benchmark S&P BSE 500. However, in the longer term of 5 years, the fund has been able to beat its benchmark and has generated a return of 20.95% as against 14.73% by its benchmark. This scheme has AUM of more than Rs 17,000 crore and has an expense ratio of 2.11%. 

 

SBI Magnum Equity Fund

Expense Ratio: 2.09 % (November 30, 2017), One Year Return: 25.79% (December 22, 2017), Net Assets: Rs 2122 crore (November 30, 2017)

This fund has generated return of just 24.19% year-to-date, as compared to 28.19% given by its benchmark Nifty 50. In the longer term of 5 years, it generated return of 20.95%, as against return of 14.73% by its benchmark. At the end of November 2017, the fund was handling assets of more than Rs 2100 crore, while its expense ratio was 2.09%. 

 

DSP BlackRock Top 100 Equity Fund - Regular Plan

Expense Ratio: 2.37 % (November 30, 2017), One Year Return: 28.55% (December 22, 2017), Net Assets: Rs 3305 crore (November 30, 2017)

This fund has generated a return of just 28.55% year-to-date, as compared to 30.96% returns given by its benchmark S&P BSE 100. This year’s bad performance has led to the underperformance of the scheme even over the longer term of 5 years, wherein it generated a return of 12.93% as against 13.19% by its benchmark. Despite fund handling assets of more than Rs 3305 crore, its expense ratio stands at 2.37%. 

 

Franklin India Bluechip Fund

Expense Ratio: 2.23 % (November 30, 2017), One Year Return: 28.64% (December 22, 2017), Net Assets: Rs 8385 crore (November 30, 2017)

This fund has generated a return of 28.64% year-to-date, as compared to 27.47% given by its benchmark S&P BSE Sensex. Over the longer term of 5 years, the fund has been able to beat its benchmark, giving a return of 14.65% as against 12.01% by its benchmark. The fund is handling assets of Rs 8385 crore and its expense ratio is 2.23%.

 

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