Most mutual funds underperformed benchmarks during 2014-19 period: Report

Mumbai, Apr 7 () Even before the COVID-19 worries-led market rout dented the value of mutual fund investments, there are chances that the fund was anyways underperforming from a long-term perspective.

According to a study by S&P Indices Versus Active (SPIVA), for the five years ending December 2019, a majority of funds were underperforming.

Typically, asset management companies say one must invest in mutual funds for the medium to long-term and see through near-term volatilities.

However, massive correction of over 25 per cent in the benchmarks over the last two months have made investors worried over the value of their portfolios.Advertisement

The SPIVA study said 82.29 per cent of equity large cap funds, 78.38 per cent of the ELSS (equity linked savings scheme) funds and 40.91 per cent of Mid/Small Cap equity funds underperformed their respective indices in the five years.

If one feels that the condition of the portfolio would be better from a longer time horizon, Akash Jain, the associate director for global research at S&P Dow Jones Indices said majority of the actively managed large-cap equity funds in India underperformed the S&P BSE 100 with 64.80 per cent large-cap funds underperforming over the 10-year ending in December 2019.

Over the one-year period ending December 2019, the S&P BSE 100 surged 10.92 per cent, while 40 per cent of the Indian Equity Large-Cap funds underperformed the benchmark, it said.
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Among all the categories evaluated in the SPIVA India Scorecard, the Mid-/Small- category fared the best for active funds with majority of them managing to beat the S&P BSE 400 MidSmallCap Index across different time horizons studied in the report.

However, the 'survivorship rate' was low at 64.04 per cent, over the 10-year period for this category, it added. AA DRRDRR
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