You open last year's mutual fund leaderboard, pick a name that sounds smart, and tell yourself you have beaten the market. A year later, the same story shows up in the middle of the pack. That pattern is not bad luck alone—it is what large, audited studies keep finding in India: many active funds trail their benchmarks over long periods, especially after costs. The uncomfortable part is that the word "benchmark" does not mean the same thing on every chart.
According to SPIVA India Year-End 2025 (S&P Dow Jones Indices, data as of 31 Dec 2025), a firm majority of funds in every SPIVA category underperformed over the 10-year horizon ending that date—while short-term results looked mixed depending on the segment. Below is a category-wise reality check, written for investors who want numbers without pretending every index is interchangeable.
Why your fund factsheet and SPIVA can tell different stories
SEBI forces honesty on labels: a large-cap fund must keep at least 80% of its assets in the top 100 stocks by market cap, mid-cap funds in the 101st–250th band, and so on. Those definitions sit in SEBI's October 2017 categorisation circular, and AMFI publishes the actual stock lists here.
SPIVA does something different: it groups actively managed funds into broad buckets and measures what share of them beat a chosen S&P index over fixed horizons. That is useful, but it is not automatically the same hurdle as "Nifty 100 TRI on my large-cap scheme factsheet." The headline large-cap row uses S&P India LargeMidCap, which is broader than a pure top-100 large-cap story. ELSS is measured against S&P India BMI, and the mid-/small-cap bucket against S&P India SmallCap.
So when someone says "80% of funds fail," your first question should be: fail against which index, over which dates, and with survivorship handled how? SPIVA answers that question transparently in its methodology—read the SPIVA India article hub alongside the PDF.
SPIVA India Year-End 2025: who underperformed, by category?
The table shows the percentage of funds that underperformed their SPIVA benchmark (equal-weighted fund counts; total return in INR). These are not return forecasts—they are historical scoreboard snapshots.
| SPIVA category | Benchmark | 1Y | 3Y | 5Y | 10Y |
|---|---|---|---|---|---|
| Indian Equity Large-Cap | S&P India LargeMidCap | 75.0% | 74.2% | 84.4% | 76.3% |
| Indian ELSS | S&P India BMI | 69.2% | 55.0% | 58.5% | 82.9% |
| Indian Equity Mid-/Small-Cap | S&P India SmallCap | 12.1% | 41.5% | 46.0% | 79.0% |
2025 context from the same report: S&P India LargeMidCap returned about +8.9% in 2025, while the equal-weighted large-cap active category returned about +7.3% (asset-weighted about +9.4%). S&P India SmallCap fell about −7.9%, while mid-/small-cap active funds were down about −0.7% equal-weighted and −0.3% asset-weighted. That helps explain why the 1-year underperformance rate for mid-/small-cap looks mild—it was an unusual relative year, not a guarantee of future skill.
Large-cap: the fee and closet-indexing problem
Over ten years, SPIVA puts large-cap underperformance near three in four funds against its chosen benchmark. Notice something else: the 5-year underperformance rate is higher than the 10-year rate in this edition. Horizons are not monotonic—always say which window you mean when you quote a headline.
Independent rolling-return work on Nifty 100 TRI often paints a similar picture: consistent outperformance is rare, and a higher expense ratio has to be earned every single year. If you want cheap, predictable large-cap beta, that is why many portfolios anchor on a Nifty 50 vs Nifty Next 50 style passive core rather than chasing last year's star manager.
Mid-/small-cap: one bucket, noisy short-term wins
SPIVA merges mid- and small-cap funds into one equity bucket. You cannot read that row as "pure mid-cap odds" without extra work. What you can say: the 10-year underperformance rate is still about 79%, so long-run scepticism survives even after a strong relative 2025.
ELSS: tax-saving is not the same as "core large-cap"
ELSS has lock-ins, flows, and mandate quirks. SPIVA compares ELSS to S&P India BMI, and the 10-year underperformance rate is steep. Use ELSS for its tax role, not as an automatic substitute for a simple index core unless you have done the maths on lock-in and overlap.
Example: when 0.7% a year quietly eats your story
Suppose a lump sum of ₹10 lakh compounds at 12% annualised for 20 years. That lands near ₹96.5 lakh before tax. Cut the net return by just 0.7 percentage points a year (roughly the kind of gap people argue about between a typical active large-cap TER and a cheap index fund), and the same ₹10 lakh grows to about ₹85.1 lakh at 11.3%. Nobody feels 0.7% in one year—but the ending wealth gap is real.
Model your own assumptions with our Lumpsum Calculator and CAGR Calculator. If you run SIPs, use XIRR instead of CAGR—see how to calculate mutual fund returns and CAGR vs absolute return.
Practical takeaways for Indian portfolios
- Name the benchmark before bragging (or panicking): Nifty 100 TRI, SPIVA's S&P indices, and your scheme's stated benchmark are different hurdles.
- Prefer cheap beta for the core: If you only need market returns, index funds and ETFs are the honest tool. Compare how far you are willing to tilt from plain large-cap in Nifty 50 vs balanced advantage funds.
- Use active as satellite, not religion: A smaller sleeve in high-conviction active funds can work if you track fees, overlap, and benchmark drift—but it is optional, not mandatory.
- Read long horizons before rewriting your SIP: One-year SPIVA rows are market noise compared to five- and ten-year evidence.
The bottom line on active vs passive in India
The SPIVA scorecard is not a personal attack on fund managers—it is a mirror. For many investors, the simplest upgrade is not picking a hotter name; it is lowering cost and clarifying which index you actually want to own. If you cannot explain your benchmark and your fee in one sentence, you are not ready to pay a premium for active risk.
Stress-test your actual contributions with our SIP Calculator and Lumpsum Calculator, browse all tools on Calculators, and keep the official SPIVA PDF bookmarked when someone tweets another "active is dead" or "index is for losers" thread. Reality lives in the footnotes.
Frequently Asked Questions
- Does SPIVA use the same benchmark as my fund factsheet? Not necessarily. SPIVA assigns category benchmarks for comparability—for example, Indian Equity Large-Cap funds are compared to the S&P India LargeMidCap index, which is broader than a pure Nifty 100 large-cap story. Always check which index a headline uses.
- Why did mid-/small-cap active funds look strong in SPIVA's 1-year data? In 2025 the S&P India SmallCap benchmark fell sharply while many active funds were down less. That flattered short-term relative results; the 10-year underperformance rate in the same report is still about 79%.
- Should I only buy index funds now? Not automatically. Many portfolios use a cheap index core plus a small active satellite. Your job is to know what you own, what it costs, and whether active risk is deliberate—or accidental overlap with the index.
- Is ELSS the same as a large-cap fund for benchmarking? No. ELSS is a tax-saving category with its own flows and constraints; SPIVA measures it against the S&P India BMI. Treat it as part of your tax plan, not as a one-to-one stand-in for a plain large-cap index fund unless the fit truly matches.