Majority of Indian Large-Cap equity mutual funds failed to beat the benchmark, with 88% of actively managed funds underperforming the S&P BSE 100 in 2022, according to new study by S&P Dow Jones Indices.
In the same period, the benchmark for Indian Equity Mid-/Small-Cap funds — the S&P BSE 400 MidSmallCap index — rose 2% in 2022, and 55% of active managers underperformed the index over that period.
Further, S&P BSE 200 grew by 6% in 2022, and 77% of Indian ELSS (equity linked saving schemes) funds underperformed the index.
According to S&P Indices Versus Active (SPIVA) Funds India Scorecard for 2022, Indian Composite Bond funds fared the best, with 45% underperforming the S&P BSE India Bond index.
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Benedek Voros, director – index investment strategy, S&P Dow Jones Indices, said, “Indian markets fared far better than most global markets in 2022, although main equity and fixed income benchmark indices dropped in H1, they staged a remarkable recovery in the second half of the year. Tightening lending standards weighed more heavily on smaller firms, with the S&P BSE 500 MidSmallCap index underperforming the S&P BSE 200 by 4%, the most since 2019.”
As per the report, the S&P BSE India Government Bond index gained by almost 3% in 2022. Interestingly, less than one-third of active managers beat the benchmark in 2022, with an underperformance rate of 68%.
In the long run, the scorecard further noted that among all categories, Indian Equity Mid-/Small-Cap funds fared the best with 50% of them beating the S&P BSE 400 MidSmallCap Index over the 10-year period ended December 2022. Over the 10-year time horizon, more than 60% of funds underperformed in all categories outside of Indian Equity Mid-/Small-Cap.
The report on actively managed mutual funds by S&P Dow Jones Indices noted that Indian ELSS funds achieved the second-highest long-term survival rates across all categories in SPIVA India Scorecard, with 78% of them still surviving after 10 years.
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