The majority of actively-managed Indian equity mutual funds
have underperformed their respective benchmark indices over the last five
years, according to the latest Standard & Poor's Index Versus Active Funds
(SPIVA) scorecard.
However, it said, funds have outperformed the indices over
the latest 12 months ending December 2011.
The scorecard reveals that 53% of large cap equity funds
failed to beat the S&P CNX Nifty, the leading benchmark index for large cap
companies listed on the NSE, over the five years ending December 2011, it said.
Taking 2011 in isolation, however, active managers fared
better, with 65% large cap equity funds producing higher returns than the
S&P CNX Nifty, it said.
A similar pattern was seen for diversified equity funds,
which offer a wider choice of stocks than large caps and therefore a greater
chance of generating excess returns. About 58% underperformed their benchmark,
the S&P CNX 500, over the past five years, it said.
In 2011 alone, however, 54% of diversified equity funds beat
the index.
Active managers of Equity Linked Saving Schemes (ELSS) and
balanced funds (equity oriented hybrid funds) have also fallen behind
benchmarks over the past five years.
In contrast, it said, the majority of active managers of
Monthly Income Plans or MIPs (debt oriented hybrid funds), gilt and debt funds
(which invest mainly in corporate debt) have outperformed their benchmarks over
a five year period.
In 2011, it said, majority of balanced and MIP funds
underperformed, while majority of ELSS, gilt and debt funds beat their
benchmarks.
The Indian mutual fund industry is going through a
consolidation phase, it said, adding, none of the categories had a 100%
survivorship over the past five years indicating mergers across categories.
Among funds, diversified equity funds had the lowest
survivorship in the one and five-year periods, while balanced funds had the
lowest survivorship in the three year period, it added.
Source: http://business-standard.com/india/news/majorityactively-managed-mfs-underperform-sp/159210/on
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