Over Half of Indian Equity Large-Cap funds underperformed their benchmark in 2023
Mumbai, April 03rd, 2024: S&P Dow Jones Indices (“S&P DJI”), the world’s leading index provider, today published the S&P Indices Versus Active Funds (SPIVA®) India Scorecard for the year ending December 2023. The past year saw differing performance among active fund managers across categories. Over half of Indian Equity Large-Cap funds failed to beat the benchmark, with 52% of actively managed funds underperforming the S&P BSE 100. Just 30% of Indian ELSS funds underperformed their benchmark, the S&P BSE 200 and is the only category where the majority of funds outperformed the relevant benchmark last year.
The SPIVA Year-End 2023 report further noted that the benchmark for Indian Equity Mid-/Small-Cap funds, the S&P BSE 400 MidSmallCap Index, rose 44. % in 2023, and 74% of active managers underperformed in this index over that period. This funds category also fared the worst in the long run, with 75% of them lagging the S&P BSE 400 MidSmallCap Index over the 10-year period ending December 2023.
According to the report, the S&P BSE India Government Bond Index increased by 7.9% in 2023 and less than a fifth of active managers beat the benchmark in this category in 2023, bringing the underperformance rate to 82%. Similarly, the S&P BSE India Bond Index rose 8.0%, while the underperformance of Indian Composite Bond fund managers was the highest across all categories in the SPIVA India Scorecard, at 96%. An interesting aspect that came to light was how over a 10-year period just 1 of 116 Indian Composite Bond funds outperformed the index, corresponding to an underperformance rate of 99.1%, the highest underperformance rate across all categories over any time horizon.
The report also took into account the global market conditions and how India stood amidst other markets. The SPIVA Year-end 2023 finds India among the leaders of the global stock market rally with all observed equity benchmarks posting gains of over 20% for the year. Indian bond markets also had a strong year, with annual returns in the high single digits (8.0%).
Benedek Voros, Director, Index Investment Strategy, S&P Dow Jones Indices said “As we reflect on the past year, the market’s vigour is unmistakable, with the S&P BSE 100 and S&P BSE 200 indices posting gains of 23.2% and 24.5%, respectively. This performance underlines a pivotal year for Indian markets, sustained by a macroeconomic environment that has seen interest rates and commodity prices stabilising.”
Report 1a: Percentage of Funds Outperformed by the Index (Based on Absolute Return)
| Fund Category | Comparison Index | 1-Year (%) | 3-Year (%) | 5-Year (%) | 10-Year (%) |
| Indian Equity Large-Cap | S&P BSE 100 | 51.61 | 87.50 | 85.71 | 62.10 |
| Indian ELSS | S&P BSE 200 | 30.00 | 53.66 | 70.73 | 67.57 |
| Indian Equity Mid-/Small-Cap | S&P BSE 400 MidSmallCap Index | 73.58 | 60.00 | 58.14 | 75.41 |
| Indian Composite Bond | S&P BSE India Bond Index | 95.59 | 67.63 | 88.89 | 99.14 |
| Indian Government Bond | S&P BSE India Government Bond Index | 81.48 | 75.00 | 64.00 | 90.00 |
Source: S&P Dow Jones Indices LLC, Morningstar, Association of Mutual Funds in India. Data as of Dec. 31, 2023. Index performance based on total returns in INR. The S&P BSE 400 MidSmallCap Index was launched Nov. 30, 2017. The S&P BSE India Government Bond Index and the S&P BSE India Bond Index were launched March 12, 2014. All data prior to index launch date is back-tested hypothetical data. Past performance is no guarantee of future results. Table is provided for illustrative purposes and reflects hypothetical historical performance. Please see the Performance Disclosure at the end of this document for more information regarding the inherent limitations associated with ba ck-tested performance.