In the dynamic world of investing, large-cap mutual funds have consistently emerged as a reliable and rewarding avenue for wealth creation. In the Indian context, these funds offer a compelling proposition for investors seeking stable returns and long-term growth. Let’s delve into the key reasons why large-cap mutual funds are a prudent choice for Indian investors in the current landscape.
What are Large-Cap Mutual Funds?
Large-cap mutual funds are a type of equity mutual fund that primarily invests in stocks of large-cap companies. These are well-established companies with a large market capitalization, typically ranked among the top 100 companies listed on the stock exchange. Large-cap funds are actively managed, meaning that a fund manager selects the stocks to invest in.
Why to Invest in Large-cap Funds?
1. Relatively Steady Returns & Wealth Creation over Long Term
Large-cap companies, being well-established and with a proven track record, tend to offer relatively stable returns compared to their mid-cap or small-cap counterparts. These companies often have strong fundamentals, consistent profitability, and established market positions. As a result, large-cap mutual funds, which invest in these companies, have historically delivered steady returns over the long term, making them an ideal choice for investors seeking consistent growth and wealth accumulation.
2. Stability During Market Fluctuations
One of the significant advantages of large-cap mutual funds is their resilience during market fluctuations. Large-cap companies are typically less volatile compared to smaller companies, as they have a more diversified revenue stream and are better equipped to weather economic downturns. This stability translates into lower volatility for large-cap mutual funds, providing investors with a sense of security and reducing the risk of significant losses during market downturns.
3. Low Liquidity Risk
Large-cap stocks are highly liquid, meaning they can be easily bought or sold without significantly impacting their price. This liquidity advantage extends to large-cap mutual funds, making them a convenient option for investors who may need to access their investments quickly. The low liquidity risk associated with large-cap funds provides peace of mind, especially during uncertain market conditions.
4. Drawdown Analysis
Drawdown analysis, which measures the peak-to-trough decline of an investment, is a crucial factor to consider when evaluating risk. Large-cap mutual funds generally exhibit lower drawdowns compared to other equity categories. This means that even during market downturns, the losses incurred by large-cap funds are relatively lower, making them a safer option for risk-averse investors.
Large-cap mutual funds have a history of consistent performance over the long term. While they may not offer the explosive growth potential of small-cap or mid-cap funds, they provide a steady and reliable path to wealth creation. This consistent performance makes them a suitable option for investors seeking a balanced and dependable investment avenue.
Top 5 Large-cap Funds in India by AUM and their trailing returns
| Fund Name | AUM (Crore) | Returns 1 Year (%) | Returns 3 Years (%) | Returns 10 Year (%) |
| ICICI Pru BlueChip | 59335.09 | 39.04 | 22.32 | 15.46 |
| SBI Blue Chip | 49182.48 | 27.01 | 17.43 | 14.71 |
| Mirae Asset Large | 39974.15 | 27.28 | 15.16 | 15.24 |
| HDFC Top 100 Fund | 35437.12 | 35.15 | 22.51 | 14.08 |
| Axis BlueChip | 34522.53 | 28.39 | 12.04 | 13.47 |
New Entrant in Large Cap Mutual Funds
| Fund Name | AUM (Crore) | Returns 1 Month (%) | Returns 1 Year (%) |
| Quant Large Cap Fund | 1507.98 | 4.33 | 44.72 |
| Motilal Oswal Large Cap | 881.0137 | 4.27 | - |
| WhiteOak Capital Large Cap Fund | 553.33 | 3.01 | 36.33 |
NFO of Large Cap Mutual Fund
Bajaj Finserv AMC recently launched a New Fund Offer (NFO) for its Large Cap Mutual Fund Scheme. While most large-cap funds typically hold over 60 stocks, Bajaj Finserv is differentiating itself by proposing a concentrated portfolio of 25-30 large-cap stocks. They will use their proprietary “INQUBE” bottom-up stock selection process to build this portfolio, aiming for a high active share.
NFO Details
| Launch Date | 29 Jul 2024 |
| Closing Date | 12 Aug 2024 |
| Minimum Investment | Rs. 500.00 |
| Systematic Investment Plan (SIP) | Rs. 500 and above (minimum 6 instalments) |
| Category of Scheme | Large Cap Fund |
| Benchmark Index | Nifty 100 Total Return Index (TRI) |
| Fund Managers | Nimesh Chandan: Chief Investment Officer, Sorbh Gupta: Senior Fund Manager - Equity, Siddharth Chaudhary: Senior Fund Manager - Fixed Income |
| NFO Presentation | View Document |
In conclusion
Large-cap mutual funds present a compelling investment opportunity for Indian investors seeking stability, steady returns, and long-term wealth creation. Their resilience during market fluctuations, low liquidity risk, lower drawdowns, and consistent performance make them an attractive choice for investors with varying risk appetites. If you are looking for a dependable investment option to grow your wealth steadily over time, large-cap mutual funds are worth considering.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice.
