Small cap. vs large cap

[raoawesome]

@Parth111

• It makes no sense to invest in active largecap funds anymore. Investors are better off investing in either Nifty 50/Sensex or Nifty 100 index funds or ETFs. The reason is because after the scheme recategorization, SEBI clearly defined the universe for large, mid and smallcap funds. Largecap funds can only invest in the top 100 stocks by marketcap, so it’s very very hard to generate any meaningful alpha.
• Some active funds will always beat the benchmarks, and you’ll only know this in hindsight. It’s very, very hard to identify funds/managers that will beat the benchmark in advance. This is the key reason why index funds and ETFs make a lot of sense.
• As the Indian markets continue to grow and deepen, these numbers will only get worse and worse.
• It’s absolutely clear from the longer term numbers that index funds or ETFs should be the core part of a portfolio. You can always use active funds or smart beta funds as a satellite part of your portfolio to generate some out performance

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