Query - Mutual fund returns over the years

[codemonkey]

I have a MF portfolio that I have built for over past 10 years(Most investment was done in the past 3 years). Equity vs Debt allocation is 85:15 in this and I am getting 7.8% XIRR.

Given that MFs quote a returns of >8% on average and market is at a peak, have I done a very bad job in choosing my MFs to get this bad returns? Or is it in general that people have this amount of returns?

Edit: Added detailed portfolio. I know that this portfolio has a lot of funds and it is due for removal of some funds. The reason I have so many funds is that I followed a very adhoc way of finding funds i.e. not goal based but returns based.

Fund Name
Percentage of Folio
XIRR

L&T Emerging Businesses Fund Direct G
8.53
0.2

HDFC Small Cap Fund Direct G
8.76
-0.5

Aditya Birla Sun Life Small Cap Fund Direct G
6.1
1.5

L&T Short Term Bond Fund Direct G
1.65
10.4

HDFC Hybrid Equity Fund Direct G
4.54
5.7

HDFC Short Term Debt Fund Direct G
1.66
10.6

L&T Midcap Direct G
8.73
12.3

HDFC Mid-Cap Opportunities Reg G
3.04
7

DSP Equity Direct G
1.85
15

ICICI Prudential FMCG Reg G
9.35
12

SBI Bluechip Direct G
1.37
9.2

SBI Bluechip Direct D
0.74
8.9

SBI Bluechip Direct G
1.03
13

DSP Small Cap Fund Direct G
1.21
2.2

Franklin Templeton Franklin India Low Duration Direct G
0.41
-13.4

ICICI Prudential Value Discovery Reg G
2.58
3

ICICI Prudential Long Term Equity Fund (Tax Saving) Reg G
6.21
13.1

Franklin Templeton Franklin India Bluechip Reg G
5.37
7.3

Franklin Templeton Franklin India Taxshield Reg G
5.33
12.8

Franklin Templeton Franklin Build India Direct G
0.38
5.1

HDFC Balanced Advantage Fund Direct G
1.54
6.1

ICICI Prudential Multi Asset Fund Direct G
1.79
8.7

ICICI Prudential Liquid Fund Direct G
1.58
6.7

Franklin Templeton Franklin Build India Direct G
0.24
3.9

Aditya Birla Sun Life Frontline Equity Direct G
1.13
9.2

HDFC Taxsaver Reg G
2.28
12.3

ICICI Prudential Value Discovery Direct G
0.64
3.3

HDFC Top 100 Fund Direct G
1.8
8.9

Kotak Low Duration Fund Direct G
0.45
9.4

 

[sister_diane]

@codemonkey 7.8% returns on SIP over a period of 10 years with 85% equity sounds quite low. Can you go into more details of your MFs so that we can comment on why it is less.

 

[codemonkey]

@sister_diane Added some details by editing the original post

 

[sister_diane]

@codemonkey Wow. That is a lot of funds. Without a view on entry and exit dates of the funds, I have a feeling that you have too much churn in your portfolio.

I would start by eliminating all regular plans

Create clear goals with time horizons

Assign funds towards those clear goals, shorter duration goals should be debt heavy, longer duration goals should be equity heavy.

To avoid churn, move to index funds. My go to list here is
UTI NIFTY (TER 0.1%)
UTI NIFTY JR (TER 0.27%)
MOTILAL OSWAL MID CAP 150 (TER 0.34%)

Between these3 funds you will cover top 250 listed companies in India.

Supplement this with liquid funds / FD for your debt portion.

Good luck and Happy investing.

 

[zashmaster]

@codemonkey I have a very important question. You have done this over 10 years. Did you rebalance periodically?

 

[codemonkey]

@zashmaster The 15% debt consists of two parts my emergency fund and hybrid funds. I am not doing any re-balancing on my emergency funds(Created this 5 years back and have been topping up as my expense increases).

Hybrid funds, who do it automatically for me.

Since my portfolio manager shows both these as consolidated I mentioned it as 85:15

 

[darincer]

@codemonkey As commented above returns are not good in past couple of years. See for individual and absolute returns.
I had invested in Axis long term equity 3yr back which is showing more than 50% absolute profit.

 

[russellmanofgod]

@codemonkey Just doing SEP on 3 quality stocks and NIFTY etf would have been better na?

 

[codemonkey]

@russellmanofgod Yeah, this is what prompted my question. The reason I invested in an active fund was because it has the potential to generate the alpha. If no alpha is generated then why should I pay the management fees(Considering my folio this is very very significant number)

 

[russellmanofgod]

@codemonkey Answer lies with you and most important - how long can you lock your money!

The only one who make money always are brokers, advisors and the government.

If you can buy it lock it and almost forget about it , then look at a few cos and do it.

 

[beliefbite]

@codemonkey 5 year FD was better than this.

 

[resjudicata]

@codemonkey Returns in past 2 years havent been that significant.

 

[uno34]

@codemonkey Should one look at absolute returns or XIRR? What matters the most?

 

[darya24]

@uno34 Consider XIRR to measure the performance or review the portfolio. Consider absolute returns in rupees not percentage terms only to measure the profitability. You may have got 100% absolute returns in a mutual find but what is the use if it is just ₹10,000 profit? It’s not going to change your life but it will just help understand your overall profit. In case of XIRR, it helps you to compare it with other investment modes or funds.

 

[crixus123]

@uno34 XIRR = rate of return

Absolute return = net growth

It's like comparing speed with distance covered.

If you're going from home to office (part of daily commute), you won't care much for the actual speed. You just want to reach there within a reasonable time, and not get too delayed in traffic. This is like saving for 1-2 years, to get a car or go on a trip or for marriage in family.

If you're traveling long distance, you'd pick a faster option (air travel) over taking a road-trip, unless you actually want to experience the road trip itself.

And as you can imagine, maintaining slightly better speed for overall trip, for longer hours / days would help you cover much more. Similarly, a 16% return over 20 years is much much better than 15% return over same 20 years.

 

[uno34]

@crixus123 Thanks mate. As usual always appreciated your quality advice and detailed posts from you.