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92% of large-cap equity funds underperformed their benchmark indices in 2018: Report

The large-cap equity funds are compared to S&P BSE 100 index, while mid, small-cap equity funds to S&P BSE 400 mid, and small-cap index respectively.

April 02, 2019 / 06:23 PM IST
Transform Holdco is a privately held company formed on February 11 2019 . It is owned by Edward Lamperts ESL investments Hedge fund . It is also known as the “ New X “ as it was formed to acquire the shares of X a well known retailer . Identify X (Image: Moneycontrol)

Transform Holdco is a privately held company formed on February 11 2019 . It is owned by Edward Lamperts ESL investments Hedge fund . It is also known as the “ New X “ as it was formed to acquire the shares of X a well known retailer . Identify X (Image: Moneycontrol)

The latest S&P Indices Versus Active (SPIVA) India Scorecard reveals that over the one-year period ending December 2018, 92 percent of large-cap equity funds, 25.6 percent of mid-/smallcap equity funds, and 81.6 percent of government bond funds underperformed their respective indices.

The SPIVA India Scorecard reports on the performance of actively managed Indian mutual funds compared to their respective benchmark indices over one-, three-, and five-year investment horizons.

Akash Jain, Associate Director, Global Research & Design, S&P Dow Jones Indices said: “The large-cap equity funds witnessed a low survivorship rate (66.7 percent) over the 10-year period and a low style consistency (42 percent) over the 1-year period ending in December 2018.”

Every six months, S&P Dow Jones Indices publishes a report to measure the performance of mutual funds with reference to their respective benchmark.

Over the 10-year period, the return spread for actively managed large-cap equity funds, between the first and the third quartile breakpoints of the fund performance, stood at 3.4 percent, pointing to a relatively large spread in fund returns.

Close

In line with the historically volatile nature of the mid-/small-cap segment of the Indian equity market, the return spread for actively managed mid-/small-cap equity funds was even higher at 5.3 percent over the same period.

The asset-weighted return for large-cap equity funds was 72 bps higher than the equal-weighted return over the 10-year period.

During the same period, the asset-weighted return of Indian Equity Mid-/SmallCap funds was 91 bps higher than their benchmark, the S&P BSE 400 MidSmallCap Index.

Over a three-year period, 88.1 percent of ELSS Funds have underperformed their respective benchmarks and the return spread between the first and third quartile breakpoints of the fund performance was 3.7 percent over the 10-year period.
PTI
first published: Apr 2, 2019 05:41 pm

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