1. On 6th Oct'17, in order to ensure uniformity in respect of the investment universe for equity schemes, Sebi redefined Large-cap, Mid-cap and Small-cap stocks, in terms of their market capitalization, as follows:-
a) Large-cap: 1st to 100th company
b) Mid-cap: 101st to 250th company
c) Small-cap: 251st company onwards.
2. By 28th May'18, nearly all AMCs had adapted this list in the portfolios of their funds, which is regularly updated by Amfi every 6 months in June and Dec of each year, and with AMCs having to rebalance their portfolios (if required) in line with the updated list within 1 month.
3. Considering this vital disruptive change of nomenclature, comparison of past performances and track records of actively managed Large-cap funds with passively managed Large-cap Index funds / ETFs is irrelevant now, and their fair comparison should, at best, be from 1st Jun'18 onwards, i.e. last 17 months, only.
4. During this period:
a) Top 20 passively managed Large-cap Index funds / ETFs have given 9-13% returns with TER of 0.05-0.46, and
b) Top 20 actively managed Large-cap funds have given 6-12% returns with TER of 1.68-2.65.
5. Sebi's fund recategorization, another disruptive change, also mandates Large-cap MFs and Large-cap Index Funds / ETFs to invest 80% and 95% resp. of their corpus only in Large-cap stocks, hence probability of the former now performing better than the latter would largely depend on residual 20% stocks in their portfolios, selected from Large-cap, Mid-cap and Small-cap stocks, albeit with associated risks and TER impact.
a) Large-cap: 1st to 100th company
b) Mid-cap: 101st to 250th company
c) Small-cap: 251st company onwards.
2. By 28th May'18, nearly all AMCs had adapted this list in the portfolios of their funds, which is regularly updated by Amfi every 6 months in June and Dec of each year, and with AMCs having to rebalance their portfolios (if required) in line with the updated list within 1 month.
3. Considering this vital disruptive change of nomenclature, comparison of past performances and track records of actively managed Large-cap funds with passively managed Large-cap Index funds / ETFs is irrelevant now, and their fair comparison should, at best, be from 1st Jun'18 onwards, i.e. last 17 months, only.
4. During this period:
a) Top 20 passively managed Large-cap Index funds / ETFs have given 9-13% returns with TER of 0.05-0.46, and
b) Top 20 actively managed Large-cap funds have given 6-12% returns with TER of 1.68-2.65.
5. Sebi's fund recategorization, another disruptive change, also mandates Large-cap MFs and Large-cap Index Funds / ETFs to invest 80% and 95% resp. of their corpus only in Large-cap stocks, hence probability of the former now performing better than the latter would largely depend on residual 20% stocks in their portfolios, selected from Large-cap, Mid-cap and Small-cap stocks, albeit with associated risks and TER impact.