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Majority of debt fund categories did not beat their benchmark

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An analysis done by Cafemutual on one-year performance of debt funds ending on December 2023 shows that majority of debt fund categories did not outperform their benchmarks.

In fact, not a single fund in categories like liquid funds, corporate bond funds, ultra-short duration funds, low duration funds and short duration funds managed to beat their respective benchmark in one year ending on December 2023.

Further analysis reveals that handful of funds in a few categories like banking and PSU funds, money market funds and credit risk funds delivered alpha in one-year period.

Let’s look at the brief one-year performance summary of top eight fund categories based on their AUM:

Liquid funds

  • No fund in the liquid fund category outperformed benchmark
  • However, underperformance is marginal in this category as it ranges between 0.03% and 0.58%
  • Canara Robeco Liquid Fund and UTI Liquid Cash Fund have the lowest underperformance in this category

Corporate bond funds

  • There was no outperformer in this category
  • Underperformance ranges from -0.16% to -1.23%
  • ICICI Prudential Corporate Bond Fund, Aditya Birla Sun Life Corporate Bond Fund and HDFC Corporate Bond Fund did well than others in this category

Money market funds

  • Of 22 funds, 1 fund – UTI Money Market Fund outperformed its benchmark by 0.07%
  • Funds with marginal underperformance were Aditya Birla Sun Life Money Manager Fund and Tata Money Market Fund

Overnight funds

  • Only 1 out of 32 overnight funds outperformed its benchmark
  • Quant Overnight Fund generated outperformance of 0.22%
  • Other scheme underperformed in the range of -0.09% to -0.47%
  • Funds with least underperformance were Bank of India Overnight Fund, Axis Overnight Fund and UTI Overnight Fund

Short duration funds

  • No outperformers in this category too
  • Underperformance ranges between -0.13% and -2.22%
  • ICICI Prudential Short-Term Fund recorded the lowest underperformance of -0.13% followed by Bandhan Bond Fund Short Term Plan and UTI Short Duration Fund with underperformance of -0.21% and -0.25%, respectively

Low duration funds

  • Not a single low duration fund beat their benchmark
  • Underperformance ranges from -0.04% to -1.31%
  • ICICI Prudential Savings Fund and UTI Low Duration Fund have the lowest underperformance rate of -0.04% and -0.24%, respectively

Ultra-short duration funds

  • Of the 24 schemes in ultra-short duration funds category, not a single scheme outperformed its benchmark
  • Underperformance ranges from -0.39% to -1.88%
  • Bandhan Ultra Short-Term Fund and Baroda BNP Paribas Ultra Short Duration Fund were the two schemes with underperformance of -0.39% and -0.47% respectively

Banking and PSU funds

  • Of the 22 schemes in the banking and PSU category, 15 schemes delivered alpha
  • ICICI Prudential Banking & PSU Debt Fund, Aditya Birla Sun Life Banking & PSU Debt Fund and Sundaram Banking & PSU Debt Fund were the top three schemes that outperformed their benchmark by 0.51%, 0.17% and 0.15%, respectively

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