Latest News | 91% of Large Cap Equity Funds Underperform Index; Small/mid Caps Best Performers

Mumbai, Oct 12 (PTI) Nearly 91 per cent of the large cap equity funds have underperformed the index in the one-year period ending June, but only 27.45 per cent of mid/small cap funds failed their indices, says a report.

A report by S&P Dow Jones Indices also said as much as 75.61 per cent of the ELSS (equity-linked savings scheme) funds also underperformed their respective benchmarks during this period.

Also Read | LIC Sells Over 2% Stake in Power Grid Corporation for Rs 3,079 Crore in 5 Months.

As much as 90.91 per cent of the large cap equity funds have underperformed the index in 12 months period ending June 2022 but only 27.45 per cent of mid/small cap funds did so and so did 75.61 per cent of the ELSS funds, S&P Dow Jones Indices said in a note on Wednesday.

The report notes that the beginning of 2022 was particularly tough for equity large-cap fund managers as 87.5 per cent of the funds in the category underperformed in H1 of 2022.

Also Read | RBI Fails To Meet Inflation Mandate; CPI Surges to 7.41% in September 2022.

The report also notes that over 89 per cent of large-cap equity funds also underperformed their benchmark in the five-year period ending June 2022.

The underperformance numbers are startling given the massive fund flow of retail and institutional money into equity-linked funds during these years.

According to the latest mutual fund data released earlier this week, SIPs drove the MF assets to a record Rs 39.88 lakh crore in September when both overall MF folios as well as retail folios also record high.

The fund industry's total assets under management stood at Rs 36.73 lakh crore in September 2021, and Rs 39.33 lakh crore in August 2022, according to Amfi, which also said September also saw the highest-ever folio addition at 13.81 crore when retail folios also hit an at an all-time high of 10.99 crore.

The SIPs AUM rose to a new peak of Rs 12.97 lakh crore from Rs 12.69 lakh crore, while the number of SIP accounts rose to 5.84 crore in the month and the net monthly SIP addition stood at Rs 12,976.34 crore.

Among all the fund categories, mid-/small cap funds have fared the best by far in the long run, with a slim majority of them managing to beat the BSE 400 mid/small cap index over the 10-year period ending June 2022.

Although the mid-cap benchmark had its worst H1 since 2013, active managers in the category had a great start to the year, with an underperformance rate of just 35.3 per cent, possibly benefiting from exposure to a few larger names in their portfolios, according to Benedek Voros, a director at S&P Dow Jones Indices.

He also notes that the ELSS funds could boast the highest long-term survival rates across all categories, with 77.8 per cent of them still surviving after 10 years.

In sharp contrast, only 22 per cent of government bond funds lagged the BSE G-secs index in the first six months of 2022, a surprise given its underperformance was a whopping 79 per cent in 2021.

Over the 10-year time horizon, over 60 per cent of funds underperformed in all categories outside of mid/small equity funds, says the report.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)