Mutual Fund Performance in Bear Markets

Introduction

During our discussion on Relative Strength Spread, we saw how the relative performance between winners and losers were compressed in the bear markets of 2011, 2012 and 2013. During these doldrums, most active investment strategies fail to outperform their benchmarks. Since most mutual fund investments span multiple bull and bear markets, it makes sense to have a look at how funds performed in the most recent bear market.

For our analysis, we took funds that had more than 90% allocated in equities and ignored sector and international funds. We then applied the same benchmark, the CNX Midcap Index, to make sure that we had an apples-to-apples comparison. A total of 200 funds were analyzed.

The 10 worst funds

Information Ratio

Fund	IR	IRR
HSBC Progressive Themes Fund – Growth	-0.99	-0.29
JM Basic Fund – Growth Option	-0.48	-0.21
HSBC Midcap Equity Fund – Growth	-0.44	-0.21
DSP BlackRock India T.I.G.E.R. Fund – Regular Plan – Growth	-0.43	-0.17
JM Multi Strategy Fund – Growth option	-0.28	-0.16
HDFC Core and Satellite Fund – GROWTH	-0.11	-0.12
JM Equity Fund-Growth	-0.00	-0.10
BARODA PIONEER GROWTH FUND – Plan A – Growth Option	0.01	-0.09
Sundaram S.M.I.L.E.Fund-Growth	0.02	-0.09
HDFC Premier Multi-Cap Fund-Growth	0.07	-0.08

Sharpe Ratio

Fund	SHARPE	IRR
HSBC Progressive Themes Fund – Growth	-0.02	-0.29
HSBC Midcap Equity Fund – Growth	-0.01	-0.21
JM Basic Fund – Growth Option	-0.01	-0.21
DSP BlackRock India T.I.G.E.R. Fund – Regular Plan – Growth	-0.01	-0.17
JM Multi Strategy Fund – Growth option	-0.01	-0.16
HDFC Core and Satellite Fund – GROWTH	-0.01	-0.12
BARODA PIONEER GROWTH FUND – Plan A – Growth Option	-0.00	-0.09
HDFC Premier Multi-Cap Fund-Growth	-0.00	-0.08
Sundaram S.M.I.L.E.Fund-Growth	-0.00	-0.09
JM Equity Fund-Growth	-0.00	-0.10

Beta

Fund	BETA	IRR
HSBC Progressive Themes Fund – Growth	1.19	-0.29
JM Basic Fund – Growth Option	1.15	-0.21
HSBC Midcap Equity Fund – Growth	1.07	-0.21
DSP BlackRock India T.I.G.E.R. Fund – Regular Plan – Growth	0.98	-0.17
JM Multi Strategy Fund – Growth option	1.02	-0.16
HDFC Core and Satellite Fund – GROWTH	0.84	-0.12
JM Equity Fund-Growth	0.92	-0.10
BARODA PIONEER GROWTH FUND – Plan A – Growth Option	0.91	-0.09
Sundaram S.M.I.L.E.Fund-Growth	0.92	-0.09
Reliance Vision Fund-GROWTH PLAN-Growth Option	0.90	-0.08

Bear Beta

Fund	BETA BEAR	IRR
HSBC Progressive Themes Fund – Growth	1.18	-0.29
HSBC Midcap Equity Fund – Growth	1.13	-0.21
JM Basic Fund – Growth Option	1.09	-0.21
JM Multi Strategy Fund – Growth option	0.98	-0.16
DSP BlackRock India T.I.G.E.R. Fund – Regular Plan – Growth	0.95	-0.17
Sundaram S.M.I.L.E.Fund-Growth	0.95	-0.09
Reliance Focused Large Cap Fund-Growth Plan-Growth Option	0.93	0.07
Principal Growth Fund-Growth Option	0.91	0.09
HDFC Top 200 Fund – Growth Option	0.91	0.04
Taurus Discovery Fund – Growth Option	0.91	0.04

Draw down depth

Fund	DRAW DEPTH	IRR
HSBC Progressive Themes Fund – Growth	-48.31	-0.29
HSBC Midcap Equity Fund – Growth	-45.71	-0.21
JM Basic Fund – Growth Option	-41.83	-0.21
JM Multi Strategy Fund – Growth option	-37.54	-0.16
Principal Emerging Bluechip Fund – Growth Option	-36.49	0.06
DSP BlackRock India T.I.G.E.R. Fund – Regular Plan – Growth	-35.52	-0.17
Sundaram S.M.I.L.E.Fund-Growth	-34.50	-0.09
ICICI Prudential MidCap Fund – Regular Plan – Growth	-33.43	0.01
JM Tax Gain Fund – Growth option	-33.33	-0.05
HDFC Core and Satellite Fund – GROWTH	-32.50	-0.12

Draw down length

Fund	DRAW LENGTH	IRR
BARODA PIONEER GROWTH FUND – Plan A – Growth Option	715.00	-0.09
Birla Sun Life Advantage Fund – Regular Growth	715.00	-0.00
Birla Sun Life Special Situations Fund – Growth	715.00	-0.06
DSP BlackRock India T.I.G.E.R. Fund – Regular Plan – Growth	715.00	-0.17
DWS Investment Opportunity Fund – Growth Option	715.00	-0.04
DWS TAX SAVING FUND-GROWTH	715.00	-0.03
DWS Alpha Equity Fund – Growth	715.00	-0.02
Edelweiss Value Opportunities Fund – Growth Option	715.00	-0.02
HDFC Core and Satellite Fund – GROWTH	715.00	-0.12
HDFC Premier Multi-Cap Fund-Growth	715.00	-0.08

The 10 best funds

Information Ratio

Fund	IR	IRR
Mirae Asset Emerging Bluechip Fund – Regular Plan – Growth Option	2.23	0.33
HDFC MID-CAP OPPORTUNITIES FUND – Growth Option	1.69	0.25
Birla Sun Life India Gennext Fund-Growth Option	1.66	0.30
BNP Paribas Mid Cap Fund-Growth Option	1.65	0.31
Religare Invesco MID N SMALL CAP Fund – Growth Option	1.64	0.29
Axis Long Term Equity Fund – Growth	1.61	0.32
ICICI Prudential Value Discovery Fund – Regular Plan – Growth	1.44	0.20
Reliance Equity Opportunities Fund-Growth Plan-Growth Option	1.43	0.20
Religare Invesco Mid Cap Fund – Growth Option	1.41	0.24
IDFC Tax Advantage (ELSS) Fund-Regular Plan-Growth	1.35	0.19

Sharpe Ratio

Fund	SHARPE	IRR
Birla Sun Life MNC Fund-Plan B (Growth)	0.04	0.36
Mirae Asset Emerging Bluechip Fund – Regular Plan – Growth Option	0.03	0.33
Axis Long Term Equity Fund – Growth	0.03	0.32
BNP Paribas Mid Cap Fund-Growth Option	0.03	0.31
Religare Invesco MID N SMALL CAP Fund – Growth Option	0.03	0.29
SBI MSFU EMERGING BUSINESSES FUND – REGULAR PLAN -GROWTH	0.03	0.30
Birla Sun Life India Gennext Fund-Growth Option	0.03	0.30
Franklin Asian Equity Fund – Growth Plan	0.03	0.30
Sundaram Global Advantage Fund Growth	0.03	0.27
Franklin India Dynamic PE Ratio Fund of Funds-Growth	0.03	0.18

Beta

Fund	BETA	IRR
Birla Sun Life MNC Fund-Plan B (Growth)	0.50	0.36
Mirae Asset Emerging Bluechip Fund – Regular Plan – Growth Option	0.76	0.33
Axis Long Term Equity Fund – Growth	0.73	0.32
BNP Paribas Mid Cap Fund-Growth Option	0.69	0.31
Birla Sun Life India Gennext Fund-Growth Option	0.76	0.30
Religare Invesco MID N SMALL CAP Fund – Growth Option	0.70	0.29
HDFC MID-CAP OPPORTUNITIES FUND – Growth Option	0.73	0.25
SBI Magnum MIDCAP FUND – REGULAR PLAN – GROWTH	0.71	0.24
Religare Invesco Mid Cap Fund – Growth Option	0.69	0.24
BNP Paribas Long Term Equity Fund – Growth Option	0.68	0.22

Bear Beta

Fund	BETA BEAR	IRR
Franklin India Dynamic PE Ratio Fund of Funds-Growth	0.43	0.18
Tata Ethical Fund Plan A – Growth	0.55	0.21
Templeton India Equity Income Fund-Growth Plan	0.55	0.07
Birla Sun Life MNC Fund-Plan B (Growth)	0.56	0.36
Birla Sun Life India Opportunities Fund-Plan B (Growth)	0.64	0.12
Canara Robeco Large Cap+ Fund – Regular Plan – Growth	0.65	0.17
Franklin India Taxshield-Growth	0.66	0.16
Religare Invesco AGILE Fund – Growth Option	0.67	0.09
Canara Robeco Emerging Equities – Regular Plan – GROWTH	0.68	0.19
Canara Robeco Equity Taxsaver – Regular Plan – Growth	0.68	0.14

Draw down depth

Fund	DRAW DEPTH	IRR
Franklin India Dynamic PE Ratio Fund of Funds-Growth	-12.06	0.18
Canara Robeco Large Cap+ Fund – Regular Plan – Growth	-14.30	0.17
UTI Opportunities Fund-Growth Option	-14.33	0.18
Axis Long Term Equity Fund – Growth	-16.95	0.32
BNP Paribas Long Term Equity Fund – Growth Option	-17.01	0.22
UTI India Lifestyle Fund – Growth Option	-17.30	0.20
Canara Robeco Equity Diversified – Regular Plan – Growth	-17.44	0.15
Franklin India Taxshield-Growth	-17.45	0.16
ICICI Prudential Focused Bluechip Equity Fund – Regular Plan – Growth	-17.66	0.17
Canara Robeco Equity Taxsaver – Regular Plan – Growth	-17.96	0.14

Draw down length

Fund	DRAW LENGTH	IRR
Franklin India Dynamic PE Ratio Fund of Funds-Growth	113.00	0.18
Canara Robeco Large Cap+ Fund – Regular Plan – Growth	145.00	0.17
Birla Sun Life MNC Fund-Plan B (Growth)	147.00	0.36
Mirae Asset Emerging Bluechip Fund – Regular Plan – Growth Option	172.00	0.33
HDFC Growth Fund – Growth Option	229.00	-0.01
Religare Invesco Mid Cap Fund – Growth Option	232.00	0.24
Axis Long Term Equity Fund – Growth	235.00	0.32
Kotak Emerging Equity Scheme – Growth	238.00	0.03
Birla Sun Life India Gennext Fund-Growth Option	258.00	0.30
UTI India Lifestyle Fund – Growth Option	266.00	0.20

Conclusion

The Birla MNC fund stands out as one having the most points in its favour: low and shallow drawdown, better sharpe and higher returns. The next stand outs were the Axis Long-term equity fund and the Mirae Asset Emerging Bluechip Fund.

In terms of the worst funds, HSBC Progressive Themes was definitely regressive to your wealth. JM Basic and Sundram SMILE funds also laid a deuce.

Mutual funds are marketed as wealth builders. However, the truth is that most of them struggle. At last count, there were more than 5300 different schemes that you could choose from.

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