The SPIVA report for 2023 showed that there was a noticeable improvement in the performance of active largecap mutual fund schemes when compared to their previous 3-year and 5-year performances. Specifically, 48% of the active largecap funds managed to outperform the S&P BSE 100 index, showcasing a better performance trend for the year 2023.
On the other hand, while equity-linked savings schemes (ELSS) emerged as the top performers with 70% of schemes outperforming the S&P BSE 200, midcap and smallcap schemes faced challenges. The report indicated that only 26% of midcap and smallcap schemes were able to deliver returns higher than the S&P BSE 400 MidSmallCap Index in 2023, highlighting a struggle in performance for these categories.
Interestingly, reports pointed out that the decline in performance of active midcap and smallcap schemes post-March 2023 rally was primarily attributed to the index being predominantly influenced by low-quality stocks, which the active funds were relatively underweight on. This disparity in positioning within the market seemed to have impacted the ability of midcap and smallcap schemes to produce competitive returns in 2023.