92% passive large cap funds fail to beat benchmarks in 2023

Around 92% passive or index-based large cap mutual funds failed to beat their respective benchmarks in 2023, an analysis of performance of large cap index funds showed. There were around 52 passive large cap schemes and 48 schemes failed to beat their respective benchmarks. In other words, only four large cap index funds managed to beat their respective benchmarks in the last year.

We considered the passive large cap schemes benchmarked against NIFTY 50 – TRI, Nifty50 Value 20 – TRI, NIFTY50 Equal Weight – TRI, Nifty100 Low Volatility 30 – TRI, Nifty100 Equal Weight – TRI, S&P BSE SENSEX – TRI, NIFTY 100 – TRI, and NIFTY NEXT 50 – TRI. These benchmarks gave 21.30%, 29.79%, 31.04%, 31.87%, 30.68%, 20.33%, 21.24%, and 27.24% respectively. We considered the regular and growth options.

Passive large cap schemes: Outperformers in 2023

Source: ACE MF, Trailing returns as on January 15, 2024

Passive large cap schemes: Underperformers in 2023

Source: ACE MF, Trailing returns as on January 15, 2024Motilal Oswal S&P BSE Enhanced Value Index Fund, the topper in the category, offered 59.31% in 2023. Motilal Oswal S&P BSE Quality Index Fund gave 32.44% in 2023. UTI Nifty 50 Index Fund, the largest passive large cap scheme based on assets managed, offered 20.89%. The scheme manages assets worth Rs 15,002.04 crore. HDFC Index Fund-NIFTY 50 Plan, second largest scheme based on assets under management, gave 20.78%. The scheme manages assets of Rs 11,887.46 crore. Both these schemes failed to beat their respective benchmarks in 2023. Taurus Nifty 50 Index Fund, the smallest passive large cap scheme, offered 19.40% against 21.30% offered by its benchmark (NIFTY 50 – TRI). The scheme failed to beat its benchmark in 2023. The scheme manages assets of Rs 3.23 crore.

Outperformers in the category
Motilal Oswal S&P BSE Enhanced Value Index Fund gave 59.31%, compared to 21.30% offered by its benchmark (NIFTY 50 – TRI) in 2023. Motilal Oswal S&P BSE Low Volatility Index Fund offered 28.88% against 21.30% by its benchmark.

Motilal Oswal S&P BSE Quality Index Fund and UTI S&P BSE Low Volatility Index Fund gave 32.44% and 29.36% respectively against 21.30% by the benchmark (Nifty 50-TRI).

Around 25 schemes have offered more than 25% in 2023. Around 18 schemes have offered approximately 20%.

Note, the above exercise is not a recommendation. The purpose of the exercise was to see how passively-managed large cap schemes performed in 2023.

One should not make investment or redemption decisions based on this exercise.