‘60% of ELSS funds failed to beat their benchmark’

Around 60% of Equity Linked Saving Schemes or tax saving mutual funds failed to beat their benchmark in the one-year period ending June, according to S&P indices versus active SPIVA India scoreboard. Around 48% large cap funds and 52% Indian composite bond funds failed to beat their benchmark in the same period, shows the mid-year review.

Over longer horizons, most actively managed large cap equity funds in India underperformed the large cap benchmark, with 67.67% large cap funds underperforming over the 10-year period ending in June 2020. During this period, the large-cap funds witnessed a low survivorship rate of 65.41%, said the press release.

Akash Jain, Associate Director, Global Research & Design, S&P Dow Jones Indices said, “Pandemic related volatility shook the Indian equity markets in H1 2020. However, the impact to various fund categories has been different. During this period more than 40% of funds in each of the equity categories underperformed their respective category benchmark, whereas 37.50% of the Indian Government Bond Funds and 92.16% of the Indian Composite Bond funds underperformed their respective benchmarks.”

Over the one-year period ending in June 2020, the return spread between the first and third quartile breakpoints was as high as 4.67% in the equity large cap funds, 6.27% for ELSS Funds, and 10.37% for equity mid/small cap funds. This emphasizes the wide distribution in fund performance and highlighting the fund selection risk for market participants, said the press release.

The SPIVA India Scorecard reports on the performance of actively-managed Indian mutual funds compared to their respective benchmark indices over one-, three-, and five-year investment horizons.


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