BackOver 50% of large-cap equity funds underperform their indices
More than 50% of the large-cap and mid/small equity funds underperform their respective benchmark indices for one year period ending 30 June, says a report
PremiumMumbai: More than 50% of the large-cap and mid/small equity funds underperformed their respective benchmark indices for one year period ending 30 June, says a report.
According to Asia Index’s S&P Indices Versus Active (SPIVA) India scorecard, 52.87% of large-cap equity funds and 56.52% of mid and small-cap equity funds underperformed their respective indices, in the past one year.
Large cap equity funds are compared against Large-Cap S&P BSE 100 index, while mid and small cap equities are compared against S&P BSE MidCap index. Besides, 73.83% of Indian composite bond funds also underperformed their S&P BSE India Bond Index.
“As of June 2007, there were 118 large-cap equity funds available for investment. Out of these, 40 funds either merged or liquidated over the 10-year period ending June 30 2017 resulting in a survivorship rate of 66%," Asia Index’s associate director for global research and design, Akash Jain, said. “Additionally, 29 funds underperformed the S&P BSE 100, in other words 59% of the funds underperformed the index."
Meanwhile, only 37.21% Indian government bonds underperformed the S&P BSE India Government Bond Index over a one year period ending 30 June.
“Over the 10-year period, the return spread for the actively managed large-cap equity funds, between the first and the third quartile break points of the fund performance, stood at 3.11%, pointing to a relatively large spread in fund returns," the report said. “Owing to the volatile nature of the mid-/small-cap segment of the Indian equity market, the return spread for the actively managed mid-/small-cap equity funds was even higher at 4.17% over the same period," it added.
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