SPIVA India Scorecard for the full year 2022

Personal finance
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S&P published the India SPIVA (S&P Indices Versus Active funds) scorecard comparing the performance of actively managed mutual funds against their benchmarks for 2022 and the results are terrible for active funds.

Performance of active mutual funds in 2022

Equity Large-Cap funds

  • 87.5% of actively managed funds undeformed the BSE 100 index.
  • Over the three and five years 96.7% and 93.8% of actively managed funds underperformed their benchmark. Over the 10-year period the underperformance is at shocking 69.7%

ELSS funds

  • 76.8% ELSS funds underperformed the index.

Equity Mid and Small-Cap funds

  • In the Mid and Small-Cap space, 54.9% funds failed to beat the benchmark index.
  • On the longer time horizon, the Mid and Small-Cap funds fared the best among all the categories, with 50% of the funds managing to beat the benchmark BSE 400 MidSmallCap index.

Government bond funds

  • The underperformance rate for actively managed Government bond funds stood at 68% in 2022.
  • Over the 3-year, 5-year and 10-year time horizons, the underperformance rates are much higher at 70.8%, 71.1& and 83%.

Composite bond funds

  • Indian Composite bond funds, which includes both government securities and AAA/AA+/AA rated corporate bonds across maturities performed the best with only 45.4% underperformance in 2022. But, over 10 year period, these funds underperformed the benchmark by a whopping 98.2%

So, what does this mean for you as an investor?

  • Your odds of picking a good active fund are worse than a coin toss. In other words, your core portfolio should be in low-cost index funds.

  • But we all would like a chance to outperform the benchmark. You can invest in actively managed funds or factor funds (Smart beta) funds in your satellite portfolio.

  • Most investors worry about underperformance, outperformance, and picking the “best funds.” While they are important, they are not as important as getting your asset allocation right.

  • In the long run, your asset allocation will determine a large part of your portfolio’s returns.

  • Most investors worry about underperformance, outperformance, and picking the “best funds.” While they are important, they are not as important as getting your asset allocation right.

Asset allocation isn’t rocket science

  • In the long run, your asset allocation will determine a large part of your portfolio’s returns.

  • Asset allocation sounds intimidating and scary, but it isn’t rocket science. There are a few basic principles that will help you get your asset allocation right easily. Check these posts

Average fund performance:

You can read the full report here:

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