Most equity mutual funds underperform last year

In terms of returns to investors, most of the equity focused mutual funds have underperformed their respective benchmark S&P BSE indices, for the one year ended December last year, says a report.

The findings are a part of S&P Dow Jones Indices' scorecard SPIVA, which tracks the performance of actively managed Indian mutual funds against their benchmarks over one-year, three-year, five-year and 10-year periods.

For the one-year ended December 29, about 59.4 per cent of largecap equity funds and 72.1 per cent of mid and smallcap funds underperformed their respective indices.


The SPIVA scorecard also revealed that 34 per cent of the composite bond funds underperformed S&P BSE India bond index over one year.

Meanwhile, 53 per cent of the equity large-cap funds underperformed the S&P BSE 100 benchmark index over the three-year period, while 80 per cent of mid/small-cap funds underperformed S&P BSE MidCap index.

"As of December-end 2007, there were 127 large-cap equity funds available for investment. Out of these 127 funds, 38 funds either merged or liquidated over the 10-year period ending December 29, 2017, resulting in a survivorship rate of 70.08 per cent" said Akash Jain, associate director, global research and design, Asia Index.

"Another 30 funds underperformed the S&P BSE 100 which led to a total of 53.5 per cent of the funds underperforming the index," he added.

Asia Index is a 50-50 partnership between S&P Dow Jones Indices and domestic bourse BSE.

Besides, most of the government bond funds underperformed S&P BSE India Government Bond Index over three, five and 10-year periods.