Over 82% of Indian Equity Large Cap funds underperformed their benchmark in the five-year period ending December 2021
MUMBAI, April 15, 2022: S&P Dow Jones Indices (“S&P DJI”), the world’s leading index provider, today published theS&P Indices Versus Active Funds (SPIVA®) India Scorecard.According to the report, 50% of Indian equity large cap fundsunderperformed the S&P BSE 100 in the one-year period ending December 2021. In the same period, 50% of Indian Equity Mid-/Small-Cap, and 27% of Indian ELSSfunds underperformed their respective benchmarks.
The markets rallied for most part of 2021in this one-year period, the S&P BSE 100 was up 26%.The underperformance is also evident over the long-term horizon, 68% of large-cap funds underperformed their benchmark over the 10-year period ending in December 2021.
Meanwhile, active funds in the ELSS and Mid-/Small-Cap categories fared better in terms of returns vis-à-vis their benchmarks. The report notes that around 39% of active ELSS and 37% of the active Mid-/Small-Cap funds underperformed their respective benchmark, in the six months ending December 2021.
Akash Jain, Associate Director, Global Research & Design, S&P Dow Jones Indices said, “Over the one-year period ending December 2021, mid-/small-cap was the best performing fund category amongst the equities covered in the SPIVA India Scorecard. The benchmark for this category, the S&P BSE 400 MidSmallCap Index, was up 51%the same period. Though, market participants in this category of active funds may have witnessed a wider spread in fund returns as the difference in the first &third quartile fund was 19% thus presenting fund selection challenges.”
Over the one-year period ending in December 2021, the S&P BSE India Government Bond Index and the S&P BSE India Bond Index gained3% and 4% respectively. Over longer periods, the majority of active funds in the bond category have underperformed their respective benchmarks.
|Exhibit 1: Second Half2021 Average Fund and Index Performance|
|FUND CATEGORY||COMPARISON INDEX||INDEX RETURN (%)||AVERAGE FUND RETURN (%)||PERCENTAGE OF FUNDS OUTPERFORMED BY THE INDEX (%)|
|Indian Equity Large-Cap||S&P BSE 100||10.73||10.92||11.07||54.55|
|Indian ELSS||S&P BSE 200||11.07||11.53||11.07||39.02|
|Indian Equity Mid-/Small-Cap||S&P BSE 400 MidSmallCap Index||13.50||15.91||14.89||37.25|
|Indian Government Bond||S&P BSE India Government Bond Index||2.77||2.31||2.52||80.77|
|Indian Composite Bond||S&P BSE India Bond Index||2.83||2.98||2.42||79.73|
Source: S&P Dow Jones Indices LLC, Morningstar. Data as of December 31, 2021. Index performance based on total return in INR. Past performance is no guarantee of future results. Table is provided for illustrative purposes
|Report 1a: Percentage of Funds Outperformed by the Index (Based on Absolute Return)|
|FUND CATEGORY||COMPARISON INDEX||1-YEAR (%)||3-YEAR (%)||5-YEAR (%)||10-YEAR (%)|
|Indian Equity Large-Cap||S&P BSE 100||50.00||70.00||82.26||67.61|
|Indian ELSS||S&P BSE 200||26.83||63.41||79.07||58.33|
|Indian Equity Mid-/Small-Cap||S&P BSE 400 MidSmallCap Index||50.00||46.51||58.14||56.06|
|Indian Government Bond||S&P BSE India Government Bond Index||79.17||53.85||76.19||88.00|
|Indian Composite Bond||S&P BSE India Bond Index||61.74||90.91||88.32||100.00|
Source: S&P Dow Jones Indices LLC, Morningstar, and Association of Mutual Funds in India. Data as of December 31, 2021. Returns are shown in INR.Past performance is no guarantee of future results. Table is provided for illustrative purposes.
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. With this edition of the scorecard, we have introduced style consistency of funds and extended the study over the 10-year period ending December 2018. It is not possible to invest directly in an index, and index returns do not reflect expenses an investor would pay. For more information, please visitwww.spglobal.com/spdji