Worst Mutual Fund companies in India

The ratings are purely based on my personal analysis and  experiences with the industry. 

I have rated these Fund Houses on the following factors. Details cannot be revealed as some of the data is not public information. I will explain why I think they are important. One last thing the rating is purely from an Investor Point of view so I have put myself in the shoes of an Investor to see what is good for me. Not what is good for the industry.

Factors that determined my RATING of Best Mutual Fund Houses

1. Overall performance of schemes Vis a Vis benchmark
2. Fund Management team
3. In house research Publications
4. Universe of stocks tracked in house
5. Corpus under Management
6. Scheme to Fund Manager Ratio
7. Expense ratio on different schemes
8. Disclosures in Fund Fact Sheet.
9. Variance from Investment Objective.
10. Innovativeness of the Fund House.

For the Inquisitive Investor – why I chose the above factors

Performance of Schemes – for obvious reasons. The better the schemes performs of a respective Fund House the better the Fund House is. It also helps in picking New Fund Offers due to strong Pedigree of Performance.

                                                     

Returns (rolling returns) gives a trend and helps to understand whether it is a one man show, in case he quits will it be like a ship without a captain. Again High beta performance is not appreciated, so when I say performance it is not absolute returns over a period of 5 years, but Risk Adjusted Performance i.e. how much risk did the fund house take to deliver the return obviously benchmarking it with peers.  

Fund Management Team – you need a strong team not a person driven business, as an investor I want to diversify my risk so I don’t want my hard earned money on the whims and fancies of a single person. I have somehow managed to live with the ups and downs of the stock market; I don’t want it (my money) to depend on the mood swings of the fund manager also. I expect a team of good knowledgeable individuals taking care of my fund. Secondly, I would avoid fund houses where there is too much churn in the FM Team it means there is lack of direction/vision, one more thing I would want to avoid.

In house Research – very important it just tells me how serious they are coz once you get it in paper then there is proof as to how they perceive or analyse the markets and sectors and how did it turn out to be 6 months down the lane. And as an investor I can evaluate whether  the Fund house(s) have followed what they published. (2) If I am not happy with the research quality I avoid the fund.

Universe of Stocks tracked In house is very important. It gives you an idea how far they have gone to give you that extra out-performance. It gives you an idea of the effort put in by the Fund House. If they are playing with the same top 200 stocks then I will buy an Index ETF and keep the extra expense I pay in my own hands. (2) It also tells how strong is their research, coz nowadays they outsource most of the research so dependability is a question. Markets work in real time and to make decisions real quick you need to have facts at the back of your hands.

Corpus Under Management – the bigger they are the less likely that they may fail. And the more stable they are, the more trust they can generate. Though it is highly debatable whether big funds perform well or small funds, I am of the opinion that economies of scale do matter. And as far as a fund house is concerned the more they get money into their schemes the better their performance and the cycle goes on.

Scheme to fund manager ratio – I wouldn't like to have an overburdened fund manager. One single soul juggling with different schemes different investment objectives, different stocks, etc. After all he is also human, he has his limitations just because he gets paid a crore doesn’t mean he has 10 heads/10 hands or 36 hours in a day. An overworked fund manager could have a negative affect on my fund kitty. So, I would rather select a fund house where the scheme to fund manager ratio is high.

Expense ratio – I know the Fund Managers need to get paid well after all they are as important to us as our family doctor or legal adviser . But that does not mean in the greed to make more profits they make us pay high fund management expenses. Compounding works both ways, not only on my return but on the expenses I pay them to get these returns counts as well.

Fund Fact sheet – you will find that the fact sheets of some the fund houses give out lot of  of information on the scheme. I agree not everyone is interested in the plethora of information they give out but there are some people with a research bent of mind, some advisors, who need certain information for comparison and to understand how have these schemes performed or why are these schemes different from their competitors. Especially in a debt fund there is hardly a few fund houses that publish the YTM, MTM and duration of the debt fund. I guess some funds don’t even mention the average maturity.  

Investment objective – Sometimes these fund houses break their promises. They pulled us on board saying they will invest into large caps. But soon, we discover they have started buying some mid cap stocks. When inquired, they said it is to increase returns. Investing into mid caps to increase returns is not a bad thing. But assuming, I am a very conservative investor, I invested into their fund for stability that a large cap gives not excess returns. By investing into mid-caps they have increased the risk element of the fund. 2. Fund houses should mention clearly what their respective schemes will do, they cannot mention general objectives like we will invest into stocks and securities traded in the stock market, hey I know that! That is precisely why I am giving you my money but tell me in what type of stocks you will be investing ‘A’ category bluechip stocks, mid cap stocks emerging company stocks, theme based investing, etc etc….

Innovation – finally I would want a fund house which always thinks above the rest of the crowd, not come out with plain vanilla schemes. I want them to come out with intelligent products from time to time. Products that make sense to investors and products which can help us amateur investors in the long run. A good fund house should always be one step ahead. Like I appreciate the fund house who first launched the SIP. The Fund House who thought of FMP the fund house who thought of Income funds as a retail Product.
 

   

  

This is just 12 mutual funds which I have entered and you may be wondering why I have not mentioned the other 28 Fund houses. It is because the 12 fund houses together manage around 900 Schemes which is comprehensive enough to take care of your entire investment needs. The other reason is the other mutual funds are not even worth mentioning. They have too much of fund management team churn, very less corpus and some of them are new to the street so let the kids grow up and then we will think of including them.    

The observant might be thinking why there are no 5 stars, that is because there is no fund house which I think deserves a 5 star. Just being better than the rest doesn’t deserve to be a  5 star right.

The Fund houses Rejected by Filtering; these fund houses have not been be able to be part of the Analysis.

Mutual Fund

AIG Global Investment Group Mutual Fund

Axis Mutual Fund

Baroda Pioneer Mutual Fund

Bharti AXA Mutual Fund

BNP Paribas Mutual Fund

Edelweiss Mutual Fund

Escorts Mutual Fund

IDBI Mutual Fund

JPMorgan Mutual Fund

Mirae Asset Mutual Fund

Morgan Stanley Mutual Fund

Motilal Oswal Mutual Fund

Peerless Mutual Fund

Pramerica Mutual Fund

Sahara Mutual Fund

Shinsei Mutual Fund

Taurus Mutual Fund

Anybody thinks the analysis could be done better, has any inputs or wants more clarity you are welcome to comment just use nice words. Top performing schemes, top schemes, best funds in india, best elss schemes, best equity schemes, best diversified equity schemes,