2 replies on “The Vanishing Alpha of Large Cap Mutual Funds”
Say, CAGR in 5 year in Benchmark return is 12% and MF scheme is 15%, drum beating is the alpha performance. My puzzle is, in direct investment I would have got about 1.5% dividend yield each year. How is it really alpha.
I am not an expert and presume that I am missing something somewhere. Can someone clear this, where is amiss in my thinking.
After reading the report some points :
1. think total returns index should be considered instead of plain index
2. Most of the top large cap funds ( active) have other benchmarks such as BSE 200, Nifty 50 etc., so not sure if comparing to bse 100 makes sense.
3. Some of the largest large cap funds are actually index funds hope they have been excluded and only the active funds taken up for study.
4. Find it useful that around 15 years holding period gives the best Risk adjusted returns, think this should be the time frame of the investors too. but sadly around 50% investors are out within a 2-3 year time frame,
2 replies on “The Vanishing Alpha of Large Cap Mutual Funds”
Say, CAGR in 5 year in Benchmark return is 12% and MF scheme is 15%, drum beating is the alpha performance. My puzzle is, in direct investment I would have got about 1.5% dividend yield each year. How is it really alpha.
I am not an expert and presume that I am missing something somewhere. Can someone clear this, where is amiss in my thinking.
After reading the report some points :
1. think total returns index should be considered instead of plain index
2. Most of the top large cap funds ( active) have other benchmarks such as BSE 200, Nifty 50 etc., so not sure if comparing to bse 100 makes sense.
3. Some of the largest large cap funds are actually index funds hope they have been excluded and only the active funds taken up for study.
4. Find it useful that around 15 years holding period gives the best Risk adjusted returns, think this should be the time frame of the investors too. but sadly around 50% investors are out within a 2-3 year time frame,