Equity funds have the lowest rate of survivorship over a five-year period when compared to other fund categories, said a Standard & Poor's-Crisil survey report.
S&P Crisil has introduced a new performance scorecard for mutual fund schemes taking into account some unique attributes.
The report covers equity, hybrid and fixed income categories of funds.
S&P Crisil Spiva scorecard removes survivorship bias, also compares a fund's return against the returns of a benchmark for that particular style and size category, said a release issued by S&P Crisil.
Also the scorecard shows both equal and asset weighted averages unlike the usual practice of calculating average returns using only equal weighting.
“S&P Crisil Spiva” performance scorecard presents the performances of actively managed mutual funds in India as compared to benchmark indices (S&P CNX Nifty and S&P CNX 500).
According to the report, “Benchmark indices have outperformed a majority of funds in most categories across one-year, three-year and five-year time periods.”
The S&P CNX Nifty index has outperformed at least 55 per cent of active large cap equity funds across all observed time periods and 70 per cent of large cap funds under performed the S&P CNX Nifty Index over a 5-year period.
Large cap and diversified equity funds only have a 74 per cent and 85 per cent rate of survival over 5-year periods respectively.
On the other hand, ELSS funds enjoyed a 100 per cent survivorship rate across all time horizons due to mandatory 3-year commitment for investors to invest in ELSS funds for availing tax benefits.
Source: http://www.thehindubusinessline.com/2010/04/30/stories/2010043052161300.htm
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