Most Indian Equity Funds Underperform S&P Indices Over 10 Years

A recent SPIVA report reveals that a majority of Indian equity mutual funds have lagged behind their respective S&P indices across various categories over a 10-year horizon. This underperformance persists despite the popularity of active fund management in India.

SPIVA Scorecard Highlights Alarming Underperformance

According to the S&P Dow Jones Indices’ SPIVA India scorecard, 73% of Indian large-cap funds and 82% of mid-cap funds and small-cap funds underperformed their respective benchmarks over the past 10 years.

 The comparison was made against the S&P India Large & Mid Cap Index and S&P India Small Cap Index respectively. Even over a 5-year period, the trend continues with 90% of large-cap funds failing to exceed benchmark returns.

ELSS and Bond Funds Struggle to Beat Benchmarks

In the ELSS (Equity Linked Savings Scheme) category, underperformance stood at 87% over 10 years and 68% over 5 years, compared to the S&P India Global Broad Market Index. Debt funds also mirrored this pattern.

 Government bond funds saw 97% underperformance over 10 years and 59% over 5 years. Similarly, 97% of Indian composite bond funds underperformed over 10 years, reinforcing the challenges for debt investors.

Risk-Adjusted Performance Tells a Similar Story

Risk-adjusted returns echoed these trends. For the 10-year period, 75% of large-cap funds lagged behind benchmarks after accounting for volatility. Interestingly, mid and small-cap funds showed relatively better risk-adjusted performance, with only 48% underperforming over 10 years and just 24% over 5 years. In ELSS, 89% underperformed the benchmark over 10 years on a risk-adjusted basis.

Read More: NPS to Allow 100% Equity Exposure Under MSF from October 1, 2025!

Long-Term Investors Face Challenges With Active Funds

The data suggests that passive index funds may provide more dependable performance over long periods, as many active funds fail to justify their fees. The SPIVA scorecard continues to raise questions about fund selection and the sustainability of active fund strategies in India.

Conclusion

The SPIVA India scorecard delivers a sobering insight into mutual fund performance. With 73% of large-cap and 82% of mid and small-cap funds underperforming over 10 years, investors must re-evaluate their choice between active and passive investments. Risk-adjusted returns further underline the difficulty in consistently beating benchmarks in both equity and debt fund categories.

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