How large AUM affects mutual fund returns analysed

India's mutual fund industry assets under management (AUM) have more than doubled to Rs 85 lakh crore in five years, raising concerns among investors about whether large scheme size impacts returns. A Livemint analysis of the four largest schemes in their respective categories shows mixed results across different time periods.

The ICICI Prudential Large Cap Fund (AUM Rs 80,960 crore) underperformed its category and BSE 100 TRI in the last year but outperformed over 3, 5, and 10 years. The HDFC Mid Cap Fund (AUM Rs 1,05,143 crore) lagged its category in the last year but beat benchmarks over longer periods. The Nippon India Small Cap Fund (AUM Rs 78,957 crore) outperformed its benchmark but trailed its category recently, leading to subscription restrictions since July 2023. The Parag Parikh Flexi Cap Fund (AUM Rs 1,48,429 crore) delivered negative returns in the last year but outperformed over longer horizons.

The analysis indicates that while some large schemes have seen short-term underperformance, most have delivered consistent returns over 3 to 10 years, suggesting AUM size alone does not determine returns.