Executive Summary
This study measures how often Large Cap Direct Growth schemes delivered an annualised return above the RBI CPI upper tolerance band of 6.0% (source: macro_benchmarks.cpi_inflation_upper), across holding periods of 1Y, 3Y, 5Y, 7Y and 10Y. Every statistic is a lump-sum, point-to-point annualised CAGR measured over daily rolling windows.
Key findings in the observed windows:
- The inflation beat probability rises with horizon: 66.02% at 1Y, 93.65% at 3Y, 95.96% at 5Y, 99.89% at 7Y and 100.0% at 10Y.
- Median CAGR is 11.49% at 1Y, 14.46% at 3Y, 14.02% at 5Y, 13.56% at 7Y and 13.98% at 10Y. The median is not monotonic; the dispersion is what narrows.
- Standard deviation of window returns falls from 17.42 at 1Y to 1.73 at 10Y.
- Loss probability (annualised return below zero) is 16.44% at 1Y, 1.47% at 3Y, 0.16% at 5Y, and 0.0% at 7Y and 10Y. The snapshot's zero-loss horizon is 7 years.
These are historical observations from a limited data window. They do not establish why returns behaved as they did, and they do not project forward.
Hypothesis and Framing
The hypothesis tested is inflation hedging: does a longer holding period raise the share of Large Cap windows whose annualised return exceeds a fixed 6.0% hurdle? The hurdle is the upper end of the RBI flexible inflation targeting band (4% +/- 2%). It is a constant threshold, not the realised CPI during each window, so the study does not compute real returns.
Methodology
- Source: daily NAV history (nav_history).
- Plan selection: Direct plan, Growth option, one series per scheme. 13 schemes were excluded because they have no Direct Growth plan.
- Universe: currently active schemes only. Survivorship bias applies: closed or merged schemes are excluded, which can flatter the observed distribution.
- Data window: window start dates run from 2013-01-01 (the data floor; Direct plans launched in January 2013) to each horizon's data_end. No claims are made about earlier periods.
- Window construction: daily calendar step, with NAV forward-filled over non-trading days; 0 windows were dropped for gaps.
- Return metric: annualised CAGR per window.
- Category label: reflects current SEBI classification, and earlier windows use today's membership. The category is dated from 2017-10-06 in the snapshot, and no claim is made about the category's history beyond what the windows show.
- Overlap: daily windows overlap heavily, so they are not independent observations. Window counts describe sample volume, not independent trials.
- Data quality: the dataset is internally validated.
Each horizon's window_count is the number of daily rolling windows pooled across the Direct Growth schemes with enough history. Scheme counts differ by horizon, so the pooled composition is not identical across rows.
Results
Inflation beat probability and sample size
| Horizon | Daily rolling windows | Direct Growth schemes | Window start dates | Inflation beat probability (>6.0%) | Median CAGR | Loss probability |
|---|---|---|---|---|---|---|
| 1Y | 116,493 | 33 | 2013-01-01 to 2025-10-01 | 66.02% | 11.49% | 16.44% |
| 3Y | 93,372 | 30 | 2013-01-01 to 2023-10-01 | 93.65% | 14.46% | 1.47% |
| 5Y | 72,375 | 27 | 2013-01-01 to 2021-10-01 | 95.96% | 14.02% | 0.16% |
| 7Y | 54,106 | 24 | 2013-01-01 to 2019-10-01 | 99.89% | 13.56% | 0.0% |
| 10Y | 28,952 | 22 | 2013-01-01 to 2016-10-01 | 100.0% | 13.98% | 0.0% |
The beat probability increases at each step. The largest jump is from 1Y (66.02%) to 3Y (93.65%). Beyond 3Y, increments are smaller: 95.96% at 5Y, 99.89% at 7Y and 100.0% at 10Y.
Return distribution by horizon
| Horizon | p5 | p25 | Median | p75 | p95 | Std dev |
|---|---|---|---|---|---|---|
| 1Y | -6.09% | 2.9% | 11.49% | 24.88% | 50.17% | 17.42 |
| 3Y | 4.71% | 11.38% | 14.46% | 17.46% | 22.69% | 5.31 |
| 5Y | 6.59% | 11.15% | 14.02% | 16.83% | 21.18% | 4.43 |
| 7Y | 9.78% | 12.22% | 13.56% | 14.84% | 16.74% | 2.07 |
| 10Y | 11.13% | 12.82% | 13.98% | 15.13% | 16.79% | 1.73 |
The 5th percentile sits below 6.0% at 1Y (-6.09%) and 3Y (4.71%), and above it at 5Y (6.59%), 7Y (9.78%) and 10Y (11.13%). The 1Y 25th percentile of 2.9% is also below 6.0%, consistent with the 66.02% beat rate.
Extremes
| Horizon | Minimum window return | Minimum window dates | Maximum window return | Maximum window dates |
|---|---|---|---|---|
| 1Y | -37.19% | 2019-03-23 to 2020-03-23 | 98.07% | 2020-03-23 to 2021-03-23 |
| 3Y | -8.17% | 2017-03-23 to 2020-03-23 | 35.43% | 2020-03-23 to 2023-03-23 |
| 5Y | -3.43% | 2015-03-23 to 2020-03-23 | 31.58% | 2020-03-23 to 2025-03-23 |
| 7Y | 4.21% | 2013-03-23 to 2020-03-23 | 20.31% | 2014-02-15 to 2021-02-15 |
| 10Y | 8.03% | 2015-03-03 to 2025-03-03 | 19.24% | 2013-08-28 to 2023-08-28 |
The weakest observed 7Y window (4.21%) is below 6.0%, which is consistent with a 7Y beat probability of 99.89% rather than 100.0%. The weakest observed 10Y window (8.03%) is above 6.0%. The single-window minimums for 1Y, 3Y and 5Y were recorded by individual schemes (HDFC Large Cap Fund for 1Y; Taurus Large Cap Fund for 3Y and 5Y); these are data points, not evaluations of those schemes.
Start-year dependence at 1Y
The 1Y loss probability varied widely by window start year: 45.18% for 2019 starts, 40.22% for 2015 starts, 0.0% for 2020 starts and 0.0% for 2023 starts. The snapshot reports loss probability by start year, not inflation beat probability by start year, so the 1Y beat rate of 66.02% is a pooled figure that may conceal comparable variation. The data cannot attribute these differences to specific causes.
Interpretation Boundaries
- Observed, not predicted. The results describe windows that began between 2013-01-01 and each horizon's data_end. Other market regimes could produce different distributions.
- Shrinking start-date range. The 10Y windows start only between 2013-01-01 and 2016-10-01, so they cover a narrow slice of start dates and overlap heavily.
- Survivorship. Only currently active schemes are included, and closed or merged schemes are excluded.
- Fixed hurdle. The comparison uses the 6.0% band, not realised inflation. Other thresholds were not tested.
- Other holding periods were not tested beyond the 5 horizons reported.
- Pre-adjustment returns. The figures are NAV-based annualised CAGR. Per the snapshot's regulatory facts (as of 2026-10-01, Finance (No. 2) Act 2024), long-term capital gains on equity mutual funds held over 1 year are taxed at 12.5% on gains above ₹1.25 lakh per financial year, and short-term gains on holdings up to 1 year are taxed at 20%. The CAGR figures here are not adjusted for these taxes.
Conclusion
In the observed windows, the share of Large Cap Direct Growth windows exceeding the 6.0% CPI upper band increased from 66.02% at 1Y to 100.0% at 10Y, while the dispersion of outcomes narrowed from a standard deviation of 17.42 to 1.73. The median CAGR stayed between 11.49% and 14.46% across the tested horizons. These are historical, lump-sum, point-to-point statistics and do not predict future results.
This is educational content, not investment advice; consult a SEBI-registered investment adviser. Past performance is not indicative of future results.
Data Integrity Statement
All figures derive from an internally validated Quant Snapshot generated on 2026-10-05, built from daily NAV history for Direct Growth plans of currently active Large Cap schemes (survivorship bias applies; closed or merged schemes are excluded). Window start dates begin at the 2013-01-01 data floor. The inflation threshold of 6.0% is taken from macro_benchmarks.cpi_inflation_upper. Tax statements are drawn only from the snapshot's regulatory_facts.