Managers of large-cap mutual funds have often faced criticism from investors who opt for passive strategies. This is mainly due to their struggle to consistently outperform benchmark returns. However, recent data suggests that these managers might have finally turned the tables.
In the past year, with the Nifty 50 hitting record highs and adding over 5,000 points, 21 out of 30 actively managed large-cap funds have managed to beat their benchmarks, as reported by NDTV Profit. It is worth noting that most of these funds are compared against broader benchmarks like the BSE 100 or the Nifty 100, as per the classification by the Association of Mutual Funds in India.
The regulations set by the Securities and Exchange Board of India dictate that a significant portion (80%) of assets under management in these funds must be invested in large-cap stocks at all times. This limitation, combined with a smaller pool of large-cap stocks to choose from, has historically posed challenges for fund managers in outperforming benchmarks.
However, the performance of these managers in the past year has been commendable. Despite the constraints, they have managed to deliver impressive results. This positive trend has certainly provided a sense of vindication for the managers of large-cap mutual funds.
DailyBubble believes that this recent success of actively managed large-cap funds is a testament to the skill and expertise of fund managers. It highlights the importance of active management in navigating through challenging market conditions and delivering superior returns for investors.