Equity largecap funds underperformed benchmarks

Mumbai: Index provider S&P Dow Jones Indices today released the S&P Indices vs Active Funds India Scorecard. According to the report, 90.91 Indian equity largecap funds underperformed the index in the one-year period ended June 2022. In the same period, 27.45 percent of Indian mid/large cap and 75.61 percent of Indian ELSHs underperformed their potential benchmarks.

The start of the year was particularly difficult for Indian equity large-cap managers, with 87.5 percent of funds in the category underperforming in the first half of 2022, according to the Spiva India Year-End 2021 Scorecard for the same period. After holding up well in the first quarter, Indian equities weakened in the second quarter of 2022.

Among all the categories included in the Spiva India Scorecard, Indian equity mid/smallcap funds performed best over the long term. A slim majority of these funds have outperformed the S&P BSE 400 Mid/Smallcap Index over the 10-year period ending June 2022.

Despite the worst performance of the Indian mid-cap benchmark since 2013, active managers in the category had a strong start to the year. With an underperformance rate of just 35.3 percent, it is likely to have benefited from investing in larger names in its portfolio.

According to Spiva India-End 2021, only 22 percent of Indian government bonds underperformed the S&P BSE India Government Bond Index in the first six months of 2022, after a 79 percent underperformance rate.

The rate of underperformance among funds generally increased over the period evaluated, with over 60 percent of funds underperforming across all categories outside of Indian equity mid/small cap over the 10-year period.