81% of Indian Equity Large Cap Funds Underperform Benchmark

MUMBAI:
The S&P Indices Versus Active (SPIVA®) India Scorecard for the period ending December 2020, reveals that 81% of Indian Equity Large Cap funds, 67% of Indian Equity Mid- /Small-cap and 65% of the ELSS funds have underperformed their respective indices.

Akash Jain, Associate Director, Global Research & Design, S&P Dow Jones Indices said, “In 2020 India joined markets across the world facing extraordinary volatility due to COVID-19. We saw a strong rebound that began at the start of the second quarter of 2020 continued into the second half 2020, with the S&P BSE 100 finishing the six-month period up 36.48%. During this recovery period we saw that the second half of 2020 has been a particularly challenging period for Indian equity active funds where 100% of the Large Cap funds, 80.% of the ELSS funds and 53% of the Mid-/Small-cap funds underperformed their respective benchmarks.”

In the second half of 2020, the asset-weighted returns lagged their respective benchmark returns in each of the Indian Equity categories: Large-cap funds (by 273 bps), ELSS funds (by 318 bps) and Mid- /Small-cap funds (by 230 bps).”

Among all the categories evaluated in the SPIVA India Scorecard, the Indian Equity Mid-/Small-Cap category fared the best for active fund managers over a 10-year investment horizon. However, in the same timeframe, 68.42% of the actively managed large-cap equity funds in India, underperformed the benchmark. The survivorship rate was low for both categories at 70.68% and 71.43% for Indian Equity Large cap and Indian Equity Mid-/Small-Cap funds respectively.