58% active funds underperform BSE 100- SPIVA

58% active funds underperform BSE 100: SPIVA

Most Indian equity large-cap funds failed to beat their benchmark, with 58% of actively managed funds underperforming the BSE 100, shows the SPIVA India Scorecard for the first half of 2023.

The SPIVA report (S&P Indices versus Active Funds) was released by S&P Dow Jones Indices on Tuesday, and shows the varying performance of active managers in India across different fund categories from January-June 2023.

Among all fund categories in the SPIVA India Scorecard, equity mid- and small-cap funds fared the best over a 5-year horizon, with only 38.1% of funds underperforming the BSE 400 MidSmallCap index.

In the fixed income fund category, while the BSE India Government Bond Index rose 4.7% in the first half, less than one-sixth of active bond fund managers beat the benchmark over the period, with underperformance at a staggering 85.2%.

On the other hand, over 3- and 5-year periods, the underperformance came in lower at 75.0% and 66.7%.

Benedek Voros, Director (Index Investment Strategy), S&P Dow Jones Indices, said: “In the early months of 2023, the Indian markets saw notable gains across various market capitalisation segments, measured in local currency. For example, the BSE 400 MidSmallCap Index — the benchmark for Indian equity mid-and small-cap funds — not only surpassed the total returns of the BSE 200 but also posted higher returns than the BSE 100 by more than 5%.”

In addition, while the BSE 400 MidSmallCap index rose 12.4% in the first half, 45.3% of active managers underperformed the index during the period.

In other categories, the BSE India Bond Index rose 4.6% in the first half of 2023 but the underperformance rates of Indian Composite Bond fund managers were the highest across all categories in the SPIVA India Scorecard, at 95.7%.

Indian equities made a good start to the year, with indices clocking decent gains during the first six months, according to the report.

The performance of the BSE 400 MidSmallCap stood out in particular, it said, as it delivered twice the total return delivered by the BSE 200 and also outperformed the BSE 100 by over 5%.