Majority of active funds lag benchmark returns in past one year

Designed to beat their benchmarks, they have lagged even over five- and ten-year horizons

Passive investing in mutual fund schemes is not popular in India. Investors have preferred schemes managed by fund managers because of their ability to beat returns of the underlying benchmarks and generate the so-called "alpha".

However, the latest SPIVA India (S&P Indices Versus Active Funds) scorecard reveals that over a one-year period ended December 2016, about 66 per cent of large-cap equity funds, 64 per cent of ELSS funds and 71 per cent of mid & small-cap equity funds underperformed their respective benchmark indices.

The underperformance reduced over longer timeframes. In the five-year period, for instance, the 54 per cent, 25 per