Most large funds fail to beat benchmarks in last five years

mutual fundsMore than half of actively managed large-cap equity mutual funds failed to beat their respective benchmark index in the past five years, according to a fresh report by S&P Dow Jones Indices and Crisil.

The standard against which the performance of mutual funds is gauged is called benchmark. The agency analyzed S&P Indices Versus Active Funds scorecard and found that 52.63 per cent of the actively managed large-cap equity mutual funds underperformed their benchmark over the last one year and 53.33 per cent underperformed their benchmark over the last five years.

This failure becomes even worse when we consider large-cap equity mutual funds’ performance in last three-year period. As per released figures, 57.14 per cent of mutual funds underperformed in the last three-year period.

S&P Indices Director Simon Karaban said that the figures demonstrated once again the trouble for fund managers to constantly outperform the benchmark.

Speaking on the topic, Karaban said, “The underperformance of actively managed funds in comparison to the benchmarks over the latest five-year period demonstrates once again the difficulty for fund managers to consistently outperform the benchmark.”

For the past few months, Indian mutual fund industry has been going through multiple changes due to various regulatory announcements as well as due to flat capital markets. That is way the number of new launches remained low and the mutual funds remained in a consolidation phase.




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