The latest S&P Indices Versus Active (SPIVA) India Scorecard report reveals 48.39 per cent of Indian equity large cap funds and 59.52 per cent of the Equity-Linked Saving Schemes (ELSS) funds underperformed their respective indices, over the one year ending June 2020. Also, 82.31 per cent of Indian composite bond funds did not perform well.
Over the longer horizon of 10-year period ending June 2020, 67.67 per cent of the actively managed large cap equity funds in India underperformed the large cap benchmark. As per the report, large cap funds witnessed a low survivor rate of 65.41per cent.
The current pandemic-related volatility has impacted the Indian equity markets in first half (H1) 2020, that led to various fund categories to underperform. “During this period more than 40 per cent of funds in each of the equity categories underperformed their respective category benchmark whereas 37.50 per cent of the Indian Government Bond Funds and 92.16 per cent of the Indian composite bond funds underperformed their respective benchmarks,” says Akash Jain, Associate Director, Global Research & Design, S&P Dow Jones Indices.
On the positive note, during H1 2020, within the equity categories, the equal-weighted index fund returns were higher as compared to their asset-weighted fund returns, which indicates smaller sized funds were able to better navigate this volatile period than their larger peers. The equal-weighted index fund considers the same set of companies to invests in them equally.
SPIVA India Scorecard compares the performance of actively managed Indian mutual funds with their respective benchmark indices over 1, 3, 5, and 10-year investment horizons.