Over 50% Of Large-cap Equity Funds Underperform Their Indices

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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.

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. 5 Best Performing Equity Mutual Funds In India

Over 50% Of Large-cap Equity Funds Underperform Their Indices

"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. 6 Precautions To Take When Investing In The Stock Market

"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 mid-/small-cap equity funds was even higher at 4.17 per cent over the same period," it added. 

Read more about: equity funds, large cap
Story first published: Thursday, October 5, 2017, 16:38 [IST]
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