Over 50% large-cap equity, 70% bond funds underperform their indices YoY: report

PTI Mumbai | Updated on January 08, 2018

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

According to Asia Index’s S&P Indices Versus Active (SPIVA) India Scorecard, 52.87 per cent of large-cap equity funds, 56.52 per cent 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 per cent 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 per cent,” Asia Index Associate Director (Global Research & Design) Akash Jain said.

“Additionally, 29 funds underperformed the S&P BSE 100, in other words 59 per cent of the funds underperformed the index,” it added.

Meanwhile, only 37.21 per cent 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 per cent, 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 for the same was even higher at 4.17 per cent over the same period,” it added.

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Published on October 05, 2017
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