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Two passive funds outperform large-cap ones

These two funds are R*Shares Nifty BeES and Junior BeES

Ashley Coutinho  |  Mumbai 

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Passive in mutual fund is not popular in India. Investors have preferred managed by fund managers because of their ability to beat returns of the underlying benchmarks.

However, two passive in the large-cap category have stolen a march over their actively managed peers.

R*Shares BeES, the oldest and most popular tracking ETF, has beaten nearly half of all large-cap over the past five-year, seven-year and 10-year period, Value Research data compiled by Tavaga, a robo-platform, show. The returns would be higher if one takes into account that the fund pays out the dividend of 1-1.5 per cent every year, say experts.

Junior BeES, which tracks Next 50, has beaten 87 per cent of all large-cap over the last five years, 61 per cent of all large-cap over the last seven years and 55 per cent of all over the last 10 years.

"Most large-cap fund managers claim that they will beat the index by 2-2.5 per cent. In practice, it may be difficult for investors to realise the higher returns because of their tendency to churn their portfolio and also the fact that very few have actually consistently beaten the benchmark. Returns may also vary depending on the investors' or his distributors' ability to pick the right fund," said Ravinath Dasika, co-founder,

are marketable securities that track an index and are traded on the stock exchange. experience price changes throughout the day as they are bought and sold.

According to Manoj Napgal, CEO, Outlook Asia Capital, the preference of active over passive is common to where institutional participation is low and the universe of stocks is under-researched. "India is slowly moving towards passive but the change may time," he said.

Experts believe that one of the main reasons investors should buy passive is the cost difference of about 150-200 basis points vis-a-vis actively-managed Active typically charge 2.5-3 per cent in expenses compared with 0.5 to 0.05 per cent charged by index

Expenses for passive are also set to decline. BeES currently charges the current expense ratio on this fund is 0.5 per cent, higher than most tracking The charges have been decreasing steadily — 3-4 years ago, the charges were about 0.7 per cent and about a seven years ago the fees were one per cent.

With money coming into passive funds, a few have dropped charges to under 0.1 per cent. This trend may accelerate in the future, adding to the outperformance of passive In the developed countries such as the US, fees passive typically charge 0.02-0.03 per cent as fees.
 

Two passive funds outperform large-cap ones

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Two passive funds outperform large-cap ones

These two funds are R*Shares Nifty BeES and Junior BeES

These two funds are R*Shares Nifty BeES and Junior BeES

Passive in mutual fund is not popular in India. Investors have preferred managed by fund managers because of their ability to beat returns of the underlying benchmarks.

However, two passive in the large-cap category have stolen a march over their actively managed peers.

R*Shares BeES, the oldest and most popular tracking ETF, has beaten nearly half of all large-cap over the past five-year, seven-year and 10-year period, Value Research data compiled by Tavaga, a robo-platform, show. The returns would be higher if one takes into account that the fund pays out the dividend of 1-1.5 per cent every year, say experts.

Junior BeES, which tracks Next 50, has beaten 87 per cent of all large-cap over the last five years, 61 per cent of all large-cap over the last seven years and 55 per cent of all over the last 10 years.

"Most large-cap fund managers claim that they will beat the index by 2-2.5 per cent. In practice, it may be difficult for investors to realise the higher returns because of their tendency to churn their portfolio and also the fact that very few have actually consistently beaten the benchmark. Returns may also vary depending on the investors' or his distributors' ability to pick the right fund," said Ravinath Dasika, co-founder,

are marketable securities that track an index and are traded on the stock exchange. experience price changes throughout the day as they are bought and sold.

According to Manoj Napgal, CEO, Outlook Asia Capital, the preference of active over passive is common to where institutional participation is low and the universe of stocks is under-researched. "India is slowly moving towards passive but the change may time," he said.

Experts believe that one of the main reasons investors should buy passive is the cost difference of about 150-200 basis points vis-a-vis actively-managed Active typically charge 2.5-3 per cent in expenses compared with 0.5 to 0.05 per cent charged by index

Expenses for passive are also set to decline. BeES currently charges the current expense ratio on this fund is 0.5 per cent, higher than most tracking The charges have been decreasing steadily — 3-4 years ago, the charges were about 0.7 per cent and about a seven years ago the fees were one per cent.

With money coming into passive funds, a few have dropped charges to under 0.1 per cent. This trend may accelerate in the future, adding to the outperformance of passive In the developed countries such as the US, fees passive typically charge 0.02-0.03 per cent as fees.
 

Two passive funds outperform large-cap ones
image
Business Standard
177 22

Two passive funds outperform large-cap ones

These two funds are R*Shares Nifty BeES and Junior BeES

Passive in mutual fund is not popular in India. Investors have preferred managed by fund managers because of their ability to beat returns of the underlying benchmarks.

However, two passive in the large-cap category have stolen a march over their actively managed peers.

R*Shares BeES, the oldest and most popular tracking ETF, has beaten nearly half of all large-cap over the past five-year, seven-year and 10-year period, Value Research data compiled by Tavaga, a robo-platform, show. The returns would be higher if one takes into account that the fund pays out the dividend of 1-1.5 per cent every year, say experts.

Junior BeES, which tracks Next 50, has beaten 87 per cent of all large-cap over the last five years, 61 per cent of all large-cap over the last seven years and 55 per cent of all over the last 10 years.

"Most large-cap fund managers claim that they will beat the index by 2-2.5 per cent. In practice, it may be difficult for investors to realise the higher returns because of their tendency to churn their portfolio and also the fact that very few have actually consistently beaten the benchmark. Returns may also vary depending on the investors' or his distributors' ability to pick the right fund," said Ravinath Dasika, co-founder,

are marketable securities that track an index and are traded on the stock exchange. experience price changes throughout the day as they are bought and sold.

According to Manoj Napgal, CEO, Outlook Asia Capital, the preference of active over passive is common to where institutional participation is low and the universe of stocks is under-researched. "India is slowly moving towards passive but the change may time," he said.

Experts believe that one of the main reasons investors should buy passive is the cost difference of about 150-200 basis points vis-a-vis actively-managed Active typically charge 2.5-3 per cent in expenses compared with 0.5 to 0.05 per cent charged by index

Expenses for passive are also set to decline. BeES currently charges the current expense ratio on this fund is 0.5 per cent, higher than most tracking The charges have been decreasing steadily — 3-4 years ago, the charges were about 0.7 per cent and about a seven years ago the fees were one per cent.

With money coming into passive funds, a few have dropped charges to under 0.1 per cent. This trend may accelerate in the future, adding to the outperformance of passive In the developed countries such as the US, fees passive typically charge 0.02-0.03 per cent as fees.
 

Two passive funds outperform large-cap ones

image
Business Standard
177 22