freefincal

Simple how-to articles and free tools for financing your goals, managing your money, mutual fund and stock investments

Only Five Large Cap funds have comfortably beat Nifty 100!

Here are 5 large cap funds that have beat the Nifty 100 Total Returns Index. Rather, only 5 out of 36 large cap funds studied in the Dec 2018 freefincal equity fund screener have managed to beat Nifty 100 consistently over 3, 4, 5 years in terms of risk and reward. I am quite surprised more than half the active large cap funds have difficulty in offering consistent downside protection!

Screening steps

  • Download the screener from the above link
  • Select category as “large cap”
  • For this study, I have removed all Sensex and Nifty based index funds as the comparison is with Nifty 100 and it would not be fair. I have retained 2 Nifty Next 50 Index funds (you don’t have to do this). This leaves us with 36 funds or 34 active funds.
  • Demand: a downside protection consistency score of greater than or equal to 90% with regard to the Nifty 100 Total Returns Index. So here we compare the monthly returns of the fund with the index over every possible 5Y. The fund should have fallen less than the index when the index monthly return was negative with a consistency of 70% or more. See the screener download post for a technical definition.

 

  • If we apply this downside filer for 5Y, the number drops from 36 to 20!
  •  Apply the same downside filter for 4Y (in addition to 5Y), the number drops from 20 to 15.
  • Apply the same downside filter for 3Y (in addition to 5Y and 4Y), the number drops from 15 to 14.
  • This is a bit surprising that less than half the no of funds studied is able to deliver consistent downside protection!!!

 

  •  With these filter on, ask how many funds have a rolling return outperformance score of greater than or equal to 70% with regard to the Nifty 100 Total returns index. This means that suppose we compute the return over 3Y in 700 different periods, the fund (direct plan) should have beat the index at least 490 times or more.
  • Apply the rolling return filter over 5Y then the 14 funds drop to 6!!!
  • Apply the rolling returns filter over 4Y and 5Y, the number remains at 6.
  • Apply over 3Y,4Y and 5Y, we finally get 5 funds!!

Five Large Cap funds that have comfortably beat Nifty 100

Five Large Cap funds that have comfortably beat Nifty 100 TRI

ICICI Prudential Bluechip Fund – Direct Plan – Growth
Reliance Large Cap Fund – Direct Plan Growth Plan – Growth Option
SBI BLUE CHIP FUND-DIRECT PLAN -GROWTH
Edelweiss Large Cap Fund – Direct Plan-Growth option
Motilal Oswal Focused 25 Fund – Direct Plan
  • These 5 funds have beat Nifty 100 TRI at least 70% of 634 to 720 3Y returns studied with at least 70% downside protection consistency
  • These 5 funds have beat Nifty 100 TRI at least 70% of 388 to 478 4Y returns studied with at least 70% downside protection consistency
  • These 5 funds have beat Nifty 100 TRI at least 70% of 146 to 246 5Y returns studied with at least 70% downside protection consistency

If we ignore downside protection

Suppose we ignore the downside protection filer and only require rolling return outperformance consistency of 70% or above over:

  • 5Y. We get 20 funds
  • 4Y and 5Y, we still get 20 funds
  • 3Y, 4Y and 5Y, we get 17 funds. Not bad, but two of then are Nifty next 50 index funds. So only 15 of the 34 active large cap funds qualify. Again less than half!
HDFC Top 100 Fund -Direct Plan – Growth Option
Aditya Birla Sun Life Focused Equity Fund – Growth – Direct Plan
Aditya Birla Sun Life Frontline Equity Fund – Growth – Direct Plan
Axis Bluechip Fund – Direct Plan – Growth
Axis Focused 25 Fund – Direct Plan – Growth Option
ICICI Prudential Bluechip Fund – Direct Plan – Growth
ICICI Prudential Nifty Next 50 Index Fund – Direct Plan – Growth
IDBI Nifty Junior Index Fund Growth Direct
Indiabulls Bluechip
Invesco India Largecap Fund – Direct Plan – Growth
Kotak Bluechip Fund – Growth – Direct
Reliance Large Cap Fund – Direct Plan Growth Plan – Growth Option
SBI BLUE CHIP FUND-DIRECT PLAN -GROWTH
JM Core 11 Fund (Direct) – Growth Option
Canara Robeco Bluechip Equity Fund – Direct Plan – Growth
Edelweiss Large Cap Fund – Direct Plan-Growth option
Motilal Oswal Focused 25 Fund – Direct Plan

Summary

I am surprised that only 14 out of 34 active large cap funds have managed to provide downside protection with respect to Nifty 100 TRI. Forget about beating the index, downside protection is the bare minimum a fund manager should do! If you do want to shift from large cap funds to 50% nifty 50 + 50% nifty next 50, I think it is time to consider aggressive hybrid or balanced advantage funds or combine active funds with nifty next 50. At least they provide pretty much guaranteed downside protection (wrt Nifty 100). Readers must keep in mind that even if you assume downside protection is not necessary, the results are promising enough. Only 50% beat the index consistently and this does not bode well for the future.

Subscribe and join the freefincal Youtube community!

 Don't like ads but want to support the site? Subscribe to the ad-free newsletter! 
You will get the full post-ad-free delivered to your inbox for Rs. 3000 a year. Follow this link to read the terms and sign up! 
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Do check out my books


You Can Be Rich Too with Goal-Based InvestingYou can be rich too with goal based investing

My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create customg solutions for your lifestye!Get it now.  It is also available in Kindle format.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template


Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.
Updated: December 25, 2018 — 5:46 pm

2 Comments

Add a Comment
  1. its also to be noted that index fund ‘never’ beats the index… and even 14 funds of 34 beating the index is significant for any middle class investor like me who is willing to spend time and pick up one of the good funds.

    1. “its also to be noted that index fund ‘never’ beats the index…” Brilliant! Nice to know you will always be able to find a good fund that will beat the index in future

Leave a Reply

Your email address will not be published. Required fields are marked *

freefincal © 2019 Frontier Theme