96% of Large-Cap Funds 'Beat' the Index. Here's What That Hides.
Nearly every active large-cap fund beats its benchmark over 10 years — until you fix the benchmark. A look at the three illusions behind the number, using every fund with a real 10-year record.
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“Active funds can’t beat the index” is received wisdom. So the data is a surprise: take every large-cap fund with a true ten-year track record, line each up against the benchmark in its own factsheet, and 96% of them win. Nearly a clean sweep for active management.
It is also almost entirely an illusion. Not a data error — every number here is real. But three things flatter that 96%, and peeling them back one at a time is the most useful thing a fund investor can learn to do.
Illusion 1: the funds pick an easy scoreboard
A “large-cap” fund can own any of India’s 100 biggest companies. Yet most benchmark themselves against the NIFTY 50 — the biggest 50. Holding good businesses ranked 51–100 is then scored as skill, when it is really just a wider net.
Swap in the NIFTY 100 — the honest yardstick for a fund fishing in the top 100 — and the win rate falls from 96% to 83%. Same funds, same decade; a fairer scoreboard.
Illusion 2: the index isn’t paid its dividends
This one is bigger, and almost nobody adjusts for it. A fund’s NAV already includes the dividends its stocks pay. But the benchmark most factsheets quote is the price-return index, which throws those dividends away. You are comparing a number that keeps the dividends against one that doesn’t.
For the NIFTY, that gap is worth roughly 1.4% a year — free outperformance handed to every fund before a manager does anything. (NSE’s own whitepaper puts the NIFTY 50’s 10-year total return near 13.4% against ~12% price-return — a ~1.38% dividend gap.) Credit the index its dividends too, and the win rate drops again, to 43%. A coin flip.
INDvest dataset · 23 active large-cap Direct-Growth funds with a 10-year record · as of 12 Jun 2026
The median fund returned 12.83% a year over ten years. Its own benchmark says it won by 1.55%. A fair, dividend-inclusive benchmark says it won by −0.17% — it lost, barely. More than half the category is now on the wrong side of the line.
Illusion 3: the dead funds aren’t in the room
And 43% still flatters them, for a reason that can’t be fixed from this data. Only funds that survived to today are in it. The large-cap funds that performed badly enough to be merged or shut down over the decade are simply gone — and they were, by definition, the losers. Every study built on surviving funds overstates the average, including this one.
These are also Direct plans, with no distributor commission. Most investors hold Regular plans, which cost roughly 1% a year more. That 1% comes straight off the return — enough to push most of the funds still above the line below it.
So do they beat the index?
Stack it up honestly — the right universe, dividends counted on both sides, the dead funds acknowledged, the commission most people actually pay — and the comfortable answer is the boring one: most active large-cap funds do not beat the index. A handful genuinely do, decade after decade (Nippon, Canara Robeco, and ICICI Prudential top the table on every measure here). But “96% beat the market” was never the story. The benchmark was.
The point isn’t that funds are bad. It’s that a performance number means nothing until you know what it was measured against. Next time a factsheet shows a fund crushing its index, ask three questions: which index, with dividends or without, and what happened to the funds that aren’t being shown.
| Fund | 10Y CAGR | vs NIFTY 50 (PR) | vs NIFTY 100 (TR*) |
|---|---|---|---|
| Nippon India Large Cap | 15.32% | +4.04 | +2.32 |
| Canara Robeco Large Cap | 14.69% | +3.41 | +1.69 |
| ICICI Prudential Large Cap | 14.54% | +3.26 | +1.54 |
| Invesco India Largecap | 14.18% | +2.90 | +1.18 |
| Edelweiss Large Cap | 13.83% | +2.55 | +0.83 |
| Mirae Asset Large Cap | 13.68% | +2.40 | +0.68 |
| Bandhan Large Cap | 13.67% | +2.39 | +0.67 |
| Kotak Large Cap | 13.50% | +2.22 | +0.50 |
| Baroda BNP Paribas Large Cap | 13.47% | +2.41 | +0.69 |
| HDFC Large Cap | 13.44% | +2.16 | +0.44 |
| Tata Large Cap | 12.97% | +1.69 | −0.03 |
| SBI Large Cap | 12.83% | +1.55 | −0.17 |
| Axis Large Cap | 12.82% | +1.54 | −0.18 |
| HSBC Large Cap | 12.79% | +1.51 | −0.21 |
| Aditya Birla SL Large Cap | 12.54% | +1.26 | −0.46 |
| Groww Largecap | 12.38% | +1.10 | −0.62 |
| DSP Large Cap | 12.16% | +0.88 | −0.84 |
| UTI Large Cap | 12.10% | +0.82 | −0.90 |
| JM Large Cap | 11.98% | +0.70 | −1.02 |
| Franklin India Large Cap | 11.31% | +0.03 | −1.69 |
| LIC MF Large Cap | 11.31% | +0.03 | −1.69 |
| PGIM India Large Cap | 11.26% | +0.20 | −1.52 |
| Taurus Large Cap | 10.24% | −1.04 | −2.76 |
INDvest dataset · Direct-Growth plans · 10Y CAGR as of 12 Jun 2026 · benchmarks price-return; TR column = NIFTY 100 price-return + 1.38% (NSE-validated NIFTY 50 TRI−PR dividend gap)
You can run the same screen yourself — filter the Fund Screener to large-cap funds, or put any two side by side in Compare Funds.
Methodology
Universe. All 35 funds in SEBI’s “Large Cap Fund” category, Direct-Growth plans, currently active in the INDvest dataset. We keep the 23 with a genuine 10-year history (a full set of 10-year rolling-return windows); the other 12 are too young, and the “10-year” figures some data sources show for them are computed on far less than ten years.
“Beat” = raw 10-year CAGR above the benchmark’s — not risk-adjusted (Jensen) alpha, which answers a different question.
Benchmarks are price-return. The underlying data — like most Indian fund factsheets — compares funds against price-return indices. We report against the funds’ declared NIFTY 50, against the more appropriate NIFTY 100 (price level taken as NIFTY 50 plus a +0.34% large-cap spread), and against a total-return bar that adds back 1.38% a year — the NIFTY 50’s dividend yield, taken from NSE’s own 10-year figures (≈13.4% total-return vs ≈12% price-return). The funds cluster right at that fair line, so the total-return win rate is sensitive to the exact gap: a 1.30% assumption gives 48%, 1.38% gives 43%. A published NIFTY 100 total-return series would pin it to the decimal; the conclusion — roughly half — does not move.
Spot-validated against public trackers. These are real figures, not modelled: Nippon India Large Cap Direct’s 10-year CAGR here (15.32%) matches an independent tracker’s (15.22%) as of the same date, and NAVs match to the rupee.
Survivorship bias is present and uncorrectable — merged and closed funds are not in the dataset, so true win rates are lower than shown. Returns are Direct-plan; Regular plans carry ~1% higher annual cost.
Numbers are frozen as of 12 June 2026 and reproducible from the compute.mjs committed alongside this article.