The large cap funds reported outflow in each of the past three months with a net cumulative outflow of Rs 5,291 crore despite the net inflow of Rs 19,503 crore by the overall equity funds.
A major reason for large cap funds to lose fervour among investors is lower returns compared with midcap and small cap counterparts. The top large cap funds have delivered a return of 16% in the past 12 months while the top 10 midcap and small cap funds by AUM have returned 21% and 30% returns respectively.
Another reason is that in the shorter time frame after adjusting for expenses, investors find an index fund or ETF a better alternative to bet on the large cap story.
There are 10 large cap funds that are not able to beat their benchmarks. Barring four large cap funds, either most of the funds are not able to beat their benchmark or beat is restricted to 3%. Number of large cap schemes remained unchanged at 30 while the overall equity Mf scheme rose to 396 in June 2023, from 365 a year before. In the past 12 months, the large cap funds recorded an outflow of Rs 3,891 crore whereas the overall equity MF reported an inflow of Rs 1.1 lakh crore. The buy-to-sale ratio of the large cap funds hovered at 0.6-0.7 in the past three months compared with 1.1-1.3 for the total equity MF schemes. The large cap AUM grew by 14.7% to Rs 2.7 lakh crore in the past 12 months, the second lowest after the focused funds category, while the AUM of the total equity MF rose by 30% to Rs 18.2 lakh crore. Large cap is currently the second largest equity MF category in terms of the AUM after the Flexicap category that contributed 15.4%.
