86% of large cap mutual funds underperformed indices

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Eighty-six per cent of large-cap equity schemes of mutual funds underperformed the indices during the one year to June 2021, which witnessed one of the strongest rallies in the markets, a report said on Monday.

The scenario was not different in mid-cap and small-cap schemes of MFs either, which witnessed 57.1 per cent of the schemes trailing the movement in the respective benchmarks, S&P Indices Versus Active (SPIVA) said in its half-yearly report.

Markets have had a phenomenal run since April 2020, fuelled by easy liquidity conditions created the world over following the pandemic, and concerns have been raised about the financial market euphoria being de-linked from actual economic activity on the ground.

The report said over longer horizons as well, the majority of the actively managed funds in India underperformed their respective benchmarks.

Over a five-year period ending in June 2021, 82.7 per cent of large-cap, 76.2 per cent of small/mid-cap and 69.6 per cent of equity-linked saving schemes underperformed their respective benchmarks.

Besides, 71.4 per cent of Indian government bonds and 97.9 per cent of Indian composite bond funds underperformed their respective benchmarks over a five-year period ending in June 2021, it added.

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