According to the latest S&P Index vs Active Funds (SPIVA) India Scorecard, Indian active funds saw a major rebound in their performance last year, with 50% equity large-cap schemes outperforming their benchmark in the year ended December 2021.
Only 26.83% ELSS or equity-linked savings schemes underperformed their benchmark during the year.
However, the long-term underperformance persisted as 82.26% of large-cap funds failed to beat their benchmark (S&P BSE 100) and 79.07% of ELSS funds underperformed the S&P BSE 200 on a five-year basis. Moreover, 68% of large-cap funds underperformed their benchmark over the 10-year period.
Meanwhile, mid- and small-cap schemes outperformed their benchmarks in terms of returns. While 50% of mid- and small-cap schemes underperformed the S&P BSE 400 Mid-Smallcap Index on a year-on-year basis, 58.14% of such funds failed to beat the returns of their benchmark over five years.
The report also said that around 54.55% of large-cap, 39.02% of active ELSS and 37.25% of active mid- and small-cap funds underperformed their respective benchmarks in the six months ended December 2021.
The SPIVA India Scorecard reports on the performance of actively managed Indian mutual funds in comparison to their respective benchmark indices over one-, three- and five-year investment horizons.
For the one-year period ended June 2021, SPIVA’s previous scorecard showed that 86.2% of Indian Equity Large-cap Fund and 53.7% of ELSS Fund underperformed their respective benchmarks.
Akash Jain, Associate Director, Global Research and Design, S&P Dow Jones Index said, “In the one-year period ended December 2021, mid-/small-cap was the best-performing fund category among equities included in the SPIVA India Scorecard . , The benchmark for this category, the S&P BSE 400 MidSmallCap Index, was up 51% over the same period. However, market participants in this category of active funds may have observed a wider spread in fund returns as the difference between the first and third quartile funds was 19%, thus posing fund selection challenges.”
In the context of debt funds, the report said that over the long term, most of the active funds in the bond category have outperformed their respective benchmarks.
The data shows that 61.74 per cent of government bonds underperformed the S&P BSE India Government Bond Index on a one-year basis, while 88.32 per cent of funds underperformed over a five-year period.