Stick to passive funds in your core portfolio, say analysts

Investors who wish to chase alpha may use active funds and factor-based funds in the satellite portfolio

The latest SPIVA (S&P indices versus active funds) scorecard is out. It confirms a trend that has been taking shape for the past several years. Over the 10-year period ended December 2021, 67.6 per cent of large-cap funds have underperformed their benchmark (S&P BSE 100) while mid-cap and small-cap funds have fared slightly better: 56.1 per cent have underperformed their benchmark (S&P BSE 400 midsmallcap index).

Fewer outperformers

Two trends are discernible. “The level of alpha has been shrinking and the number of funds that beat their benchmarks has also been falling,” says Kaustubh Belapurkar, director, manager research, Morningstar Investment