Have active large cap funds performed better after the March 2020 market crash?

Published: March 15, 2022 at 6:00 am

A reader asks, “I notice that many large cap mutual funds have five-star ratings now. This was not the situation before the March 2020 crash. Can you please do a study on this?”

Results of active large cap funds vs benchmark study will depend on the duration of the returns considered and when the return was computed. To eliminate this bias, we compute rolling returns. That is we find every possible 1,2,3,4 and 5-year return since the inception of direct mutual funds – 1st Jan 2013 and find out how consistently a fund has outperformed a representative category benchmark.

These results are published monthly in our mutual fund screeners. If we use the March 2022 edition, we find that, over every possible 5 year period, only 8 out of 27 funds (excluding index funds and ETFs), have outperformed the Nifty 100 TRI consistently.

Consistency is defined as a better return than the index 70% or more out of all the rolling return periods considered. This is reasonable considering the exorbitant expense ratio paid regardless of performance.

So this is a poor outcome for active fund management and their investors. The “emergence” of index funds is not a recent development as we have shown before: Poor performance of active mutual funds: Is this a recent development? and Active mutual funds struggle to beat Nifty 50 for the last seven years! and Only Five Large Cap funds have comfortably beat Nifty 100!


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Now to answer the specific question of performance has improved after the March 2020 market crash. For this, we shall consider trailing 5-year returns. That is the return over the last five years from any given date.

At least a five-year window is necessary as performance is hard to judge over shorter durations and can fluctuate.

First, let us look at the overview of the results. The data (list of funds) is presented below.

  1. As of March 11th 2022, only six out of 27 large cap funds have outperformed Nifty 100 TRI (14.3167 %) over a trailing 5Y period.
  2. As of March 11th 2021, only six out of 27 large cap funds have outperformed Nifty 100 TRI (16.5625 %) over a trailing 5Y period.
  3. As of March 11th 2020, 14 out of 27 large cap funds have outperformed Nifty 100 TRI (5.3259 %) over a trailing 5Y period.
  4. As of March 11th 2019, 17 out of 27 large cap funds have outperformed Nifty 100 TRI (13.7596 %) over a trailing 5Y period.
  5. As of March 11th 2018, 19 out of 27 large cap funds have outperformed Nifty 100 TRI (14.0496 %) over a trailing 5Y period.

The first two entries are enough to conclude that active large cap fund performance has not improved since the March 2020 crash. In fact based on trailing 5Y return data alone, it has become worse!

Now if you look at the fund tabulated below it is quite tempting to choose X or Y fund which is common in all listings. Unfortunately, the list is similar to a game of musical chairs with old funds dropping out and new funds coming in.

That is, today it is easy to choose the best mutual fund based on past data. Whether it will remain on top after we start investing in it is anybody’s guess.  So the outperformance we get from active funds is essentially based on luck. Sometimes it works in our favour and sometimes not.

List of 5Y trailing return large cap fund outperformers

(1) As of March 11th 2022, only six out of 27 large cap funds have outperformed Nifty 100 TRI (14.3167 %) over a trailing 5Y period. Outperformers are listed in bold.

Scheme Name5 Year return
Axis Bluechip Fund(G)-Direct Plan18.0308
Canara Rob Bluechip Equity Fund(G)-Direct Plan16.9234
Mirae Asset Large Cap Fund(G)-Direct Plan15.1693
Edelweiss Large Cap Fund(G)-Direct Plan14.8851
BNP Paribas Large Cap Fund(G)-Direct Plan14.8659
Invesco India Largecap Fund(G)-Direct Plan14.5491
ICICI Pru Bluechip Fund(G)-Direct Plan14.2778
IDBI India Top 100 Equity Fund(G)-Direct Plan14.2118
UTI Mastershare(IDCW)-Direct Plan14.1496
Kotak Bluechip Fund(IDCW)-Direct Plan13.8855
IDFC Large Cap Fund(G)-Direct Plan13.8018
LIC MF Large Cap Fund(G)-Direct Plan13.7930
Nippon India Large Cap Fund(G)-Direct Plan13.5504
Tata Large Cap Fund(G)-Direct Plan13.3028
SBI BlueChip Fund(G)-Direct Plan13.1562
L&T India Large Cap Fund(G)-Direct Plan12.7385
HSBC Large Cap Equity Fund(G)-Direct Plan12.6766
Aditya Birla SL Frontline Equity Fund(G)-Direct Plan12.5750
Navi Large Cap Equity Fund(G)-Direct Plan12.4261
HDFC Top 100 Fund(G)-Direct Plan12.1607
Indiabulls Blue Chip Fund(G)-Direct Plan11.6961
PGIM India Large Cap Fund(G)-Direct Plan11.6292
JM Large Cap Fund(G)-Direct Plan11.4949
Baroda Large Cap Fund(G)-Direct Plan11.3376
Franklin India Bluechip Fund(G)-Direct Plan11.3030
DSP Top 100 Equity Fund(G)-Direct Plan9.8443
Taurus Largecap Equity Fund(G)-Direct Plan8.5129

(2) As of March 11th 2021, only six out of 27 large cap funds have outperformed Nifty 100 TRI (16.5625 %) over a trailing 5Y period.

We shall now list only the outperformers.

Canara Rob Bluechip Equity Fund(G)-Direct Plan19.4854
Axis Bluechip Fund(G)-Direct Plan19.2100
Mirae Asset Large Cap Fund(G)-Direct Plan18.8482
ICICI Pru Bluechip Fund(G)-Direct Plan17.0061
HSBC Large Cap Equity Fund(G)-Direct Plan16.7707
Edelweiss Large Cap Fund(G)-Direct Plan16.7251

(3) As of March 11th 2020, 14 out of 27 large cap funds have outperformed Nifty 100 TRI (5.3259 %) over a trailing 5Y period.

Axis Bluechip Fund(G)-Direct Plan10.2605
Mirae Asset Large Cap Fund(G)-Direct Plan8.4021
Canara Rob Bluechip Equity Fund(G)-Direct Plan8.0631
Indiabulls Blue Chip Fund(G)-Direct Plan7.1990
Invesco India Largecap Fund(G)-Direct Plan6.5205
BNP Paribas Large Cap Fund(G)-Direct Plan6.3151
Navi Large Cap Equity Fund(G)-Direct Plan6.3112
Edelweiss Large Cap Fund(G)-Direct Plan6.1635
SBI BlueChip Fund(G)-Direct Plan6.0057
HSBC Large Cap Equity Fund(G)-Direct Plan5.8580
ICICI Pru Bluechip Fund(G)-Direct Plan5.8451
LIC MF Large Cap Fund(G)-Direct Plan5.7995
Kotak Bluechip Fund(IDCW)-Direct Plan5.6991
PGIM India Large Cap Fund(G)-Direct Plan5.5470

(4) As of March 11th 2019, 17 out of 27 large cap funds have outperformed Nifty 100 TRI (13.7596 %) over a trailing 5Y period.

Mirae Asset Large Cap Fund(G)-Direct Plan19.3149
Nippon India Large Cap Fund(G)-Direct Plan17.9514
SBI BlueChip Fund(G)-Direct Plan16.4109
Invesco India Largecap Fund(G)-Direct Plan15.9158
Axis Bluechip Fund(G)-Direct Plan15.7254
ICICI Pru Bluechip Fund(G)-Direct Plan15.5698
Aditya Birla SL Frontline Equity Fund(G)-Direct Plan15.4226
HDFC Top 100 Fund(G)-Direct Plan15.3588
BNP Paribas Large Cap Fund(G)-Direct Plan15.3440
Edelweiss Large Cap Fund(G)-Direct Plan14.7579
Kotak Bluechip Fund(IDCW)-Direct Plan14.3917
Indiabulls Blue Chip Fund(G)-Direct Plan14.3868
PGIM India Large Cap Fund(G)-Direct Plan14.3642
Canara Rob Bluechip Equity Fund(G)-Direct Plan14.3337
UTI Mastershare(IDCW)-Direct Plan14.0696
Navi Large Cap Equity Fund(G)-Direct Plan13.9350
L&T India Large Cap Fund(G)-Direct Plan13.7680

(5) As of March 11th 2018, 19 out of 27 large cap funds have outperformed Nifty 100 TRI (14.0496 %) over a trailing 5Y period.

Mirae Asset Large Cap Fund(G)-Direct Plan20.8219
Nippon India Large Cap Fund(G)-Direct Plan18.1908
SBI BlueChip Fund(G)-Direct Plan18.0968
Aditya Birla SL Frontline Equity Fund(G)-Direct Plan17.2011
ICICI Pru Bluechip Fund(G)-Direct Plan16.9444
Invesco India Largecap Fund(G)-Direct Plan16.8641
BNP Paribas Large Cap Fund(G)-Direct Plan16.6274
PGIM India Large Cap Fund(G)-Direct Plan16.0921
Axis Bluechip Fund(G)-Direct Plan15.9150
Edelweiss Large Cap Fund(G)-Direct Plan15.7018
IDBI India Top 100 Equity Fund(G)-Direct Plan15.3461
L&T India Large Cap Fund(G)-Direct Plan15.1592
HDFC Top 100 Fund(G)-Direct Plan14.9836
UTI Mastershare(IDCW)-Direct Plan14.8664
Tata Large Cap Fund(G)-Direct Plan14.7344
Kotak Bluechip Fund(IDCW)-Direct Plan14.6614
Indiabulls Blue Chip Fund(G)-Direct Plan14.4296
Navi Large Cap Equity Fund(G)-Direct Plan14.4172
Canara Rob Bluechip Equity Fund(G)-Direct Plan14.3149

 

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