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Despite market rally, large-cap funds are struggling to generate alpha

26 of 35 such schemes failed to beat Sensex over past year

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Financial stocks account for nearly 44 per cent of the Sensex. The technology and energy stocks have the second and the third biggest weighting, but that’s nowhere close to financials

Chirag Madia Mumbai
A majority of large-cap-focused equity mutual fund (MF) schemes have underperformed the benchmark Sensex over the past year despite the record-setting market rally. Of 35 such schemes, only 9 have managed to generate alpha — a term used to describe a fund manager’s ability to beat the market.

So, what weighed on the performance of large-cap funds? The underperformance of the financial pack. Traditionally, most schemes in the large-cap space have been overweight on financial stocks. The BSE Finance has severely unperformed the Sensex with returns of just 11.2 per cent in the past year.

“Over the past year, one can see

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First Published: Feb 24 2021 | 12:35 AM IST

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