A look at the performance of active large-cap mutual funds vs. Nifty 100


In this article, we compare the trailing returns and rolling returns of actively managed large cap mutual funds to the Nifty 100 TRI using the Equity Mutual Fund Screener for February 2023.

Trailing returns are the last one, two, three, four, and five-year returns as of February 3, 2023. Rolling returns are every possible one, two, three, four, and five-year return from January 1, 2013 to February 3, 2023.

18 of the 31 funds did better than the Nifty 100 TRI over the past year.
After 2 years, 17 out of 30 did better than expected.
After 3 years, 14 out of 28 did better than expected.
13 of the 27 things that came after 4Y were better.
Behind 5Y: 13 out of 27 did better than expected.
About half of the funds did better than the Nitfy 100 RI, as you can see. There is a catch, though! If you only look at the last four or five years, the number drops to 11. If you do the same thing over 3, 4, and 5 years, you only end up with ten funds.

Now, if you look at all possible 3, 4, and 5-year time periods since January 1, 2013, and ask how many actively managed large cap funds have done better than the Nifty 100 TRI at least 70% of the time, there are only four:

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The Axis Bluechip Fund—Direct Plan—Growth Mirae Asset Large Cap Fund, Direct Growth Plan
Canara Robeco Blue Chip Equity Fund: direct plan; growth option

Edelweiss large cap fund—direct plan-growth option
So less than 15% of large-cap funds can say that they have consistently outperformed the Nifty 100, which is a terrible record.

This doesn’t mean that midcap or smallcap funds are a better bet to beat benchmarks. Unfortunately, this is not true, as we have already seen:

The best way to invest is to do nothing. A Nifty or Sensex index fund plus a Nifty Next 50 index fund for those who understand the risk-reward ratio.

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