About 88% large-cap funds underperformed: SPIVA scorecard

Majority of the Indian large-cap equity funds failed to beat the benchmark in 2022, with 88% of actively managed funds underperforming the BSE 100, according to the S&P Indices Versus Active Funds (SPIVA) India Scorecard published on Tuesday by S&P Dow Jones Indices.

During the same period, the benchmark for Indian equity mid- and small-cap funds, the BSE 400 MidSmallCap Index, rose 2%, with 55% of active managers underperforming the same. The BSE 200 rose almost 6%, and 77% of Indian ELSS funds underperformed this index.

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In the long run, the scorecard noted that among all categories, Indian Equity Mid- and Small-Cap funds fared the best, with 50% of them beating the S&P BSE 400 MidSmallCap Index over the 10-year period ending December 2022. Over the 10-year time horizon, more than 60% of funds underperformed in all categories outside the Indian Equity Mid- and Small-Cap. 

According to the report, the BSE India Government Bond Index increased by almost 3% in 2022, and less than one-third of active managers beat the benchmark, with an underperformance rate of 68%. 

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Indian Composite Bond Funds fared the best in the same period, with only 45% underperforming the BSE India Bond Index. Benedek Voros, Director, Index Investment Strategy, S&P Dow Jones Indices, said: “Indian markets fared far better than most global markets; although the 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 BSE 500 MidSmallCap Index underperforming the BSE 200 by 4%, the most since 2019.”

The report noted that Indian ELSS funds achieved the second-highest long-term survival rates across all categories, with 77.8% of them still surviving after 10 years. Meanwhile, 76.9% of Indian ELSS funds underperformed the index. Over a 10-year period, some funds showed improvement, with 63.9% underperforming the benchmark.