Neutral impactEconomy
Active large-cap funds closely mirror Nifty 50 index: New study finds 90% overlap in sectoral allocation
livemint.com 1 hr ago·30 Jul 2026, 12:00 pm
Economy livemint.com
A new study has revealed that the majority of India's actively managed large-cap funds have extremely low stock-picking ability. The research shows that these funds allocate their money in almost exactly the same way as the Nifty 50 index, with a 90% overlap in sectoral choices. This means that investors are paying high management fees for a portfolio that looks almost identical to a passive benchmark.
This trend matters because it suggests that active managers are struggling to generate consistent alpha. When funds mirror the index so closely, the performance of these funds is likely to track the broader market rather than outperform it. For investors, this highlights the importance of comparing fund performance against its benchmark to ensure they are getting value for their money.
Investors should watch for upcoming quarterly reports to see if this trend continues. If active funds continue to underperform the index, it may prompt a shift in investor preferences toward passive index funds. It is also crucial to review the expense ratios of these funds, as the high fees may not be justified by the minimal diversification they offer compared to a standard index fund.
Key takeaways
- Category: Economy.
- Assessed as a significant, market-relevant update.
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