Active large-cap funds closely mirror Nifty 50 index: New study finds 90% overlap in sectoral allocation

A study by DSP Mutual Fund finds that active large-cap funds have about 90% sectoral allocation overlap with the Nifty 50 index.

Portfolio overlap with the index is even higher among the largest large-cap funds by assets under management (AUM).

The median active large-cap fund closely mirrors Nifty 50 sector weights, with financials at 34.5% vs. 36.8% in the index.

The biggest overweight is in consumer discretionary (13.5% vs. 11.1%), while energy is underweight (5.8% vs. 9.8%).

The study suggests investors holding both a large-cap fund and a Nifty 50 index fund may not gain significant sector diversification.