Moneycontrol
Oct 05, 2017 04:51 PM IST | Source: PTI

Over 50% of large-cap equity funds underperform their indices

Asia Index's S&P Indices Versus Active (SPIVA) India Scorecard, 52.87 percent of large-cap equity funds, 56.52 percent of mid/small-cap equity funds underperformed their respective indices, in the past one year.

More than 50 percent of the large-cap and mid/small equity funds underperformed their respective benchmark indices for one year period ending June 30, says a report.

Asia Index's S&P Indices Versus Active (SPIVA) India Scorecard, 52.87 percent of large-cap equity funds, 56.52 percent of mid/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/small cap equities are compared against S&P BSE MidCap index.

Besides, 73.83 percent of Indian composite bond funds also underperformed their index -- 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 percent," Asia Index Associate Director (Global Research & Design) Akash Jain said.

"Additionally, 29 funds underperformed the S&P BSE 100, in other words 59 percent of the funds underperformed the index," it added.

Meanwhile, only 37.21 percent Indian government bonds underperformed the index -- S&P BSE India Government Bond Index -- over a one year period ending June 30, 2017. "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 percent, 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 percent over the same period," it added.
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