Majority of equity, composite bond funds underperformed indices: Report

Nearly half of large-cap funds, over half of ELSS and over three-fourths of composite bond funds have underperformed their respective indices in the year to June 2020, a report said

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Nearly half of large-cap funds, over half of equity linked saving schemes (ELSS) and over three-fourths of composite bond funds have underperformed their respective indices in the year to June 2020, a report said on Thursday.

The latest S&P Indices Versus Active (SPIVA) compared the performance of actively managed Indian mutual funds with their respective benchmark indices over one, three, five and ten-year investment horizons.

The study found that for the one-year period ending June 2020, 48.39 per cent of Indian equity large-cap funds, 59.52 per cent of the ELSS funds and 82.31 per cent of Indian composite bond funds underperformed their respective indices, as per a statement.

The story is similar over a longer term horizon as well, it said, adding 67.67 per cent of large-cap funds underperformed the large-cap benchmark over the 10-year period ending in June 2020.

During this period, the large-cap funds witnessed a low survivorship rate of 65.41 per cent, it added.

In the first half of the calendar 2020, more than 40 per cent of funds in each of the equity categories underperformed their respective category benchmarks, whereas 37.50 per cent of the Indian government bond funds and 92.16 per cent of the Indian composite bond funds underperformed their respective benchmarks, S&P Dow Jones Indices' Associate Director Akash Jain said.