Helping funds generate better risk-adjusted returns compared to their benchmark (alpha) is fund managers’ primary task. However, generating alpha becomes difficult when a stock market matures— falling alpha in the developed markets is a case in point. In other words, 54% of all actively-managed large-cap funds fail to beat their benchmark indices. This value is generated by multiplying the alpha of each fund with its weight in the large-cap category. Since Indian large-cap funds charge around 2% expense ratio, this falling alpha is a major cause of concern for investors.

Source: Economic Times June 04, 2018 00:56 UTC