An “appropriate” benchmark means a fund’s alpha will be useful for evaluation only if it holds stocks from the chosen benchmark. Regulation allows large-cap funds to invest not more than 20% in stocks outside of the benchmark. So, comparison of a large-cap fund’s performance to its benchmark may not be technically meaningful. In this article, we discuss when it is acceptable, though not necessarily accurate, to compare large-cap fund performance to its large-cap benchmark. At the first level is the comparison of the fund’s performance with its benchmark index.

Source: The Hindu March 16, 2026 01:56 UTC