In this article, we look at the trailing returns and rolling returns of actively managed large cap mutual funds vs Nifty 100 TRI using the Equity Mutual Fund Screener Feb 2023.
Trailing returns refers to the last 1,2,3,4, and 5-year return as of Feb 3rd 2023 and rolling returns refer to every possible 1,2,3,4 and 5-year return from 1st Jan 2013 to Feb 3rd 2023.
- Trailing 1Y: 18 out of 31 funds did better than Nifty 100 TRI
- Trailing 2Y: 17 out of 30 outperformed
- Trailing 3Y: 14 out of 28 outperformed
- Trailing 4Y: 13 out of 27 outperformed
- Trailing 5Y: 13 out of 27 outperformed
You can see that about half the funds did better than the Nitfy 100 RI. However, there is a catch! If you look for outperformance over the last 4 and 5 years, the number drops to 11. If you do the same over 3 and 4, and 5 years, there are only ten funds.
Now, if you ask over every possible 3, 4 and 5-year period since 1st Jan 2013, how many actively managed large cap funds have outperformed Nifty 100 TRI at least 70% of the time, we are left with only four funds:
- Axis bluechip fund – direct plan – growth
- Mirae asset large cap fund – direct plan – growth
- 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 claim to have beat the Nifty 100 consistently, which is an abysmal record.
This does not mean mid cap or small cap funds are a better bet to beat benchmarks. Sadly this is not true, as we have established earlier:
Passive investing is the way forward. A Nifty or Sensex index fund plus a Nifty Next 50 index fund for those who can appreciate its risk-reward equation.
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