The latest SPIVA® (S&P Indices Versus Active) India Scorecard reveals that over a one-year period, ending 29 December 2017, 59.4% of large-cap equity funds, 72.1% of mid/small-cap equity funds and 34% of Indian composite bond funds underperformed their respective indices.
Akash Jain, Associate Director, Global Research & Design, Asia Index Private Limited said: “As of December end 2007, there were 127 large-cap equity funds available for investment. Out of these 127 funds, 38 funds either merged or liquidated over the 10-year period ending 29 December 2017 resulting in a survivorship rate of 70.08%. Another 30 funds underperformed the S&P BSE 100 which led to a total of 53.5% of the funds underperforming the index.”
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 3.23%, pointing to a relatively large spread in fund returns. 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 4.44 % over the same period.
Asset-weighted return of large-cap equity funds was 87 basis points higher than the equal-weighted return, over the 10-year period. In contrast, the margin between asset- and equal- weighted return for Mid/Small Cap funds was only 12 basis points.
None of the peer groups had a 100% survivorship rate over the 10-year period. At 48.33 %, Indian Government Bonds had the lowest rate of survivorship, whereas ELSS funds recorded the highest survivorship rate of 96.55% over the same 10-year period amongst equity fund categories.
