These large-cap index funds have the lowest tracking error and expense ratio
In the year 2022, 87 per cent of the actively managed large-cap funds underperformed S&P BSE 100 Total Returns Index. This points towards the benefits of investing in an index fund. This article lists the top large-cap index funds with the lowest tracking error and expense ratio.
“Don’t look for the needle in the haystack. Just buy the haystack” – John C. Bogle. By this, John C. Bogle meant that, rather than buying individual stocks from the index, buy the index itself. John C. Bogle was a firm believer that it is difficult for an active fund manager consistently beat the index.
To understand this, we carried out a study wherein we gathered calendar year returns of actively managed Large-Cap funds and the S&P BSE 100 Total Returns Index (TRI) from 2014 to 2022.
|
Calendar Year Returns of Actively Managed Large-Cap Funds and S&P BSE 100 TRI
|
|
Fund
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
|
S&P BSE 100 TRI
|
34.21
|
-1.95
|
5.02
|
33.27
|
2.61
|
10.92
|
16.84
|
26.53
|
6.03
|
|
Aditya Birla SL Frontline Equity Fund
|
44.72
|
1.1
|
7.43
|
30.58
|
-2.91
|
7.64
|
14.22
|
27.9
|
3.54
|
|
Axis Bluechip Fund
|
40.85
|
-1.24
|
-3.62
|
38.03
|
6.54
|
18.57
|
19.72
|
20.64
|
-5.66
|
|
Bank of India Bluechip Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-2.99
|
|
Baroda BNP Paribas Large Cap Fund
|
47.4
|
5.58
|
-5.5
|
37.05
|
-3.97
|
17.18
|
16.84
|
22.08
|
4.21
|
|
Canara Rob Bluechip Equity Fund
|
35.89
|
-0.47
|
1.89
|
31.37
|
3.39
|
15.68
|
23.06
|
24.54
|
0.82
|
|
DSP Top 100 Equity Fund
|
37.49
|
-2.33
|
4.89
|
26.48
|
-2.72
|
14.85
|
7.49
|
19.53
|
1.44
|
|
Edelweiss Large Cap Fund
|
37.65
|
0.77
|
0.4
|
33.8
|
1.69
|
11.52
|
17.29
|
23.39
|
3.38
|
|
Franklin India Bluechip Fund
|
37.22
|
2.02
|
6.45
|
26.31
|
-3.58
|
5.26
|
13.67
|
32.76
|
-2.22
|
|
HDFC Top 100 Fund
|
46.52
|
-6.09
|
8.52
|
31.97
|
0.13
|
7.7
|
5.91
|
28.54
|
10.61
|
|
HSBC Large Cap Fund
|
34.85
|
-2.99
|
8.02
|
30.53
|
-3.17
|
15.11
|
15.85
|
22.7
|
0.51
|
|
ICICI Prudential Bluechip Fund
|
41.10
|
-0.21
|
7.74
|
32.75
|
-0.81
|
9.77
|
13.49
|
29.17
|
6.85
|
|
IDBI India Top 100 Equity Fund
|
40.62
|
3.2
|
1.55
|
28.04
|
-5.92
|
12.71
|
16.43
|
31.25
|
2.94
|
|
IDFC Large Cap Fund
|
30.39
|
-5.67
|
5.28
|
34.16
|
-4.23
|
10.59
|
17.41
|
26.75
|
-2.32
|
|
Indiabulls Blue Chip Fund
|
28.71
|
3.24
|
4.43
|
33.36
|
-1.37
|
12.01
|
8.15
|
17.45
|
4.39
|
|
Invesco India Largecap Fund
|
39.52
|
4.57
|
2.77
|
28.34
|
-0.44
|
10.5
|
14.05
|
32.53
|
-2.99
|
|
ITI Large Cap Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
21.42
|
-0.24
|
|
JM Large Cap Fund
|
45.48
|
-1.26
|
1.82
|
20.86
|
0.8
|
4.9
|
18.11
|
23.20
|
3.40
|
|
Kotak Bluechip Fund
|
42.46
|
3.77
|
2.93
|
29.18
|
-2.11
|
14.2
|
16.37
|
27.74
|
1.99
|
|
L&T India Large Cap Fund
|
44.58
|
-0.23
|
0.83
|
29.52
|
-1.96
|
13.25
|
13.06
|
24.49
|
3.67
|
|
LIC MF Large Cap Fund
|
39.85
|
-2.58
|
2.31
|
26.77
|
0.72
|
14.99
|
13.81
|
23.77
|
-1.58
|
|
Mahindra Manulife Large Cap Pragati Yojana
|
-
|
-
|
-
|
-
|
-
|
-
|
11.89
|
29.69
|
1.89
|
|
Mirae Asset Large Cap Fund
|
52.86
|
4.25
|
8.09
|
38.58
|
-0.64
|
12.73
|
13.7
|
27.74
|
1.60
|
|
Nippon India Large Cap Fund
|
54.65
|
1.11
|
2.23
|
38.42
|
-0.2
|
7.25
|
4.91
|
32.37
|
11.33
|
|
PGIM India Large Cap Fund
|
43.45
|
2.04
|
2.70
|
28.16
|
-3.61
|
14.52
|
13.33
|
20.97
|
1.47
|
|
Quant Large Cap Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
SBI BlueChip Fund
|
47.86
|
7.99
|
4.83
|
30.23
|
-4.11
|
11.64
|
16.34
|
26.08
|
4.36
|
|
Sundaram Large Cap Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
27.48
|
4.05
|
|
Tata Large Cap Fund
|
36.05
|
1.34
|
2.9
|
29.54
|
-3.65
|
12.11
|
8.33
|
32.67
|
3.31
|
|
Taurus Largecap Equity Fund
|
38.41
|
3.15
|
-1.56
|
25.63
|
-6.22
|
8.51
|
10.15
|
17.96
|
6.68
|
|
Union Largecap Fund
|
-
|
-
|
-
|
-
|
-5.06
|
12.04
|
15.07
|
28.56
|
-0.48
|
|
UTI Mastershare
|
43.29
|
-0.49
|
3.6
|
29.57
|
-0.39
|
10.69
|
18.67
|
29.56
|
-1.79
|
|
Performance of Actively Managed Large-Cap Funds against S&P BSE 100 TRI
|
|
Fund
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
|
Aditya Birla SL Frontline Equity Fund
|
10.51
|
3.05
|
2.41
|
-2.69
|
-5.52
|
-3.28
|
-2.62
|
1.37
|
-2.49
|
|
Axis Bluechip Fund
|
6.64
|
0.71
|
-8.64
|
4.76
|
3.93
|
7.65
|
2.88
|
-5.89
|
-11.69
|
|
Bank of India Bluechip Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-9.02
|
|
Baroda BNP Paribas Large Cap Fund
|
13.19
|
7.53
|
-10.52
|
3.78
|
-6.58
|
6.26
|
0.00
|
-4.45
|
-1.82
|
|
Canara Rob Bluechip Equity Fund
|
1.68
|
1.48
|
-3.13
|
-1.90
|
0.78
|
4.76
|
6.22
|
-1.99
|
-5.21
|
|
DSP Top 100 Equity Fund
|
3.28
|
-0.38
|
-0.13
|
-6.79
|
-5.33
|
3.93
|
-9.35
|
-7.00
|
-4.59
|
|
Edelweiss Large Cap Fund
|
3.44
|
2.72
|
-4.62
|
0.53
|
-0.92
|
0.60
|
0.45
|
-3.14
|
-2.65
|
|
Franklin India Bluechip Fund
|
3.01
|
3.97
|
1.43
|
-6.96
|
-6.19
|
-5.66
|
-3.17
|
6.23
|
-8.25
|
|
HDFC Top 100 Fund
|
12.31
|
-4.14
|
3.50
|
-1.30
|
-2.48
|
-3.22
|
-10.93
|
2.01
|
4.58
|
|
HSBC Large Cap Fund
|
0.64
|
-1.04
|
3.00
|
-2.74
|
-5.78
|
4.19
|
-0.99
|
-3.83
|
-5.52
|
|
ICICI Prudential Bluechip Fund
|
6.89
|
1.74
|
2.72
|
-0.52
|
-3.42
|
-1.15
|
-3.35
|
2.64
|
0.82
|
|
IDBI India Top 100 Equity Fund
|
6.41
|
5.15
|
-3.47
|
-5.23
|
-8.53
|
1.79
|
-0.41
|
4.72
|
-3.09
|
|
IDFC Large Cap Fund
|
-3.82
|
-3.72
|
0.26
|
0.89
|
-6.84
|
-0.33
|
0.57
|
0.22
|
-8.35
|
|
Indiabulls Blue Chip Fund
|
-5.50
|
5.19
|
-0.59
|
0.09
|
-3.98
|
1.09
|
-8.69
|
-9.08
|
-1.64
|
|
Invesco India Largecap Fund
|
5.31
|
6.52
|
-2.25
|
-4.93
|
-3.05
|
-0.42
|
-2.79
|
6.00
|
-9.02
|
|
ITI Large Cap Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-5.11
|
-6.27
|
|
JM Large Cap Fund
|
11.27
|
0.69
|
-3.20
|
-12.41
|
-1.81
|
-6.02
|
1.27
|
-3.33
|
-2.63
|
|
Kotak Bluechip Fund
|
8.25
|
5.72
|
-2.09
|
-4.09
|
-4.72
|
3.28
|
-0.47
|
1.21
|
-4.04
|
|
L&T India Large Cap Fund
|
10.37
|
1.72
|
-4.19
|
-3.75
|
-4.57
|
2.33
|
-3.78
|
-2.04
|
-2.36
|
|
LIC MF Large Cap Fund
|
5.64
|
-0.63
|
-2.71
|
-6.50
|
-1.89
|
4.07
|
-3.03
|
-2.76
|
-7.61
|
|
Mahindra Manulife Large Cap Pragati Yojana
|
-
|
-
|
-
|
-
|
-
|
-
|
-4.95
|
3.16
|
-4.14
|
|
Mirae Asset Large Cap Fund
|
18.65
|
6.20
|
3.07
|
5.31
|
-3.25
|
1.81
|
-3.14
|
1.21
|
-4.43
|
|
Nippon India Large Cap Fund
|
20.44
|
3.06
|
-2.79
|
5.15
|
-2.81
|
-3.67
|
-11.93
|
5.84
|
5.30
|
|
PGIM India Large Cap Fund
|
9.24
|
3.99
|
-2.32
|
-5.11
|
-6.22
|
3.60
|
-3.51
|
-5.56
|
-4.56
|
|
Quant Large Cap Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
SBI BlueChip Fund
|
13.65
|
9.94
|
-0.19
|
-3.04
|
-6.72
|
0.72
|
-0.50
|
-0.45
|
-1.67
|
|
Sundaram Large Cap Fund
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.95
|
-1.98
|
|
Tata Large Cap Fund
|
1.84
|
3.29
|
-2.12
|
-3.73
|
-6.26
|
1.19
|
-8.51
|
6.14
|
-2.72
|
|
Taurus Largecap Equity Fund
|
4.20
|
5.10
|
-6.58
|
-7.64
|
-8.83
|
-2.41
|
-6.69
|
-8.57
|
0.65
|
|
Union Largecap Fund
|
-
|
-
|
-
|
-
|
-7.67
|
1.12
|
-1.77
|
2.03
|
-6.51
|
|
UTI Mastershare
|
9.08
|
1.46
|
-1.42
|
-3.70
|
-3.00
|
-0.23
|
1.83
|
3.03
|
-7.82
|
|
- Positive Values represent outperformance against index.
- Negative Values represent underperformance against index.
|
As can be seen in the above table, 87 per cent of the actively managed large-cap funds underperformed S&P BSE 100 TRI. In fact, since 2016, the actively managed large-cap funds started to lose their charm. This clearly explains the importance of investing in index funds over actively managed large-cap funds.
Moreover, another reason for investing in index funds over actively managed large-cap funds is the relatively lower expense ratio. The average expense ratio of an actively managed large-cap fund (direct plan) is 1.04 per cent, while that of the index fund is 0.25 per cent, which is almost 75 basis points (100 basis points = 1 per cent) lower than the actively managed large-cap fund.
List of Top Large-Cap Index Funds with lowest expense ratio and tracking error
|
Name
|
AUM (Rs Crore)
|
NAV (Rs)
|
Expense Ratio (%)
|
Tracking Error (%)
|
|
NAVI Nifty 50 Index Fund
|
580
|
11.58
|
0.06
|
0.12
|
|
IDFC Nifty 50 Index
|
550
|
39.31
|
0.08
|
0.18
|
|
SBI Nifty Index Fund
|
3,100
|
164.48
|
0.18
|
0.03
|
|
Motilal Oswal Nifty 50 Index Fund
|
230
|
15.30
|
0.10
|
0.06
|
|
UTI Nifty 50 Index Fund
|
9,000
|
123.63
|
0.20
|
0.03
|
|
Tata Nifty 50 Index Fund
|
330
|
119.92
|
0.16
|
0.11
|
|
IDBI Nifty Index
|
220
|
36.28
|
0.16
|
0.09
|
|
Nippon India Index Nifty 50
|
650
|
32.41
|
0.20
|
0.04
|
|
ICICI Prudential Nifty 50 Index Fund
|
3,800
|
186.13
|
0.17
|
0.08
|
|
Axis Nifty 100 Index Fund
|
850
|
15.94
|
0.15
|
0.20
|
Final Thoughts
Our analysis shows that actively managed large-cap funds underperform S&P BSE 100 TRI. Moreover, even the expense ratio of index funds is lower than actively managed large-cap funds which in turn adds to the returns. However, having a proper asset allocation that goes with your risk profile is recommended. Moreover, it is wise to track your investments at least once every quarter to make sure your investments are on track.