Nifty index weights skew returns

The paradox of a bull run which hasn't rewarded investors holding portfolios similar to the Nifty is due to the quirk of index construction

In the last 12 months, the Nifty has returned 15 per cent in rupee terms, with the breakout of the last month having resulted in 3 per cent gains. In dollar terms, the returns in the past year amount to about 3 per cent.

By any standards, that's a big bull market. Or is it? Some experienced long-term investors who hold large-cap portfolios anchored to the Nifty have lost money. This is despite being buy-and hold players, who have not made the classic mistakes of churning, or blindly chasing momentum.

The paradox of a bull run which hasn’t rewarded investors holding portfolios