Equity mutual funds lag benchmark indices

A majority of actively-managed Indian equity mutual funds have underperformed their respective benchmark indices in the last 5 years till June 2012, according to the latest S&P Indices Versus Active Funds (SPIVA) scorecard, produced by S&P Dow Jones Indices in partnership with CRISIL.

A majority of actively-managed Indian equity mutual funds have underperformed their respective benchmark indices in the last 5 years till June 2012, according to the latest S&P Indices Versus Active Funds (SPIVA) scorecard, produced by S&P Dow Jones Indices in partnership with CRISIL.

HT Image

According to the report, the percentage of actively managed equity funds underperforming the benchmark indices witnessed a fall since December 2010. Although most equity funds still continue to underpoerform the indices.

The latest SPIVA scorecard reveals that a majority of large cap equity funds failed to beat the S&P CNX Nifty, the leading benchmark index for large-cap companies listed on the National Stock Exchange of India (NSE), 53.3% underperformed their benchmark over the last five years, 57.1% over the last three years and 52.6% over the last year.

“Over 53.1% of diversified funds outperformed the benchmark S&P CNX 500 in the 1-year period ending June 2012. This number increased to 61.6% in the 3-year period but again dropped to 49.5% in the 5-year period. A similar trend is noted for ELSS (equity savings linked scheme), where the percentage of funds outperforming the benchmark in both the 1 year and 3-year period is stable at about 70% but drops significantly to 44.8% in the 5 year period,” the report said.