Large Cap Mutual Funds are the open-ended equity schemes which invest a minimum of 80% of the total assets into stocks of large cap companies. According to SEBI, companies with a market capitalisation of Rs.20,000 crores or more are called large-cap companies (top 100 companies in terms of market capitalisation).
Top 5 Large Cap Mutual Funds for 2020
Given below is a list of five best Large Cap Mutual Funds which you can consider investing in the year 2020:
|Fund Name||AUM (Cr.)||1-Year Return (%)||3-Year Returns (%)||5-Year Returns (%)|
|Mirae Asset Large Cap Fund||16,873||15.98||16.09||12.50|
|Axis Bluechip Fund||10,212||23.34||21.50||11.93|
|ICICI Prudential Bluechip Fund||25,025||12.02||13.39||9.42|
|SBI Bluechip Fund||23,641||14.55||12.21||10.48|
|Nippon India Large Cap Fund||12,955||9.55||14.39||9.17|
(Data as on 20th January 2020; Source- Value Research)
1. Mirae Asset Large Cap Fund
This is an open-ended equity scheme which majorly invests in large cap stocks. The scheme has a flexible approach towards allocation of assets with up to 80% of total assets invested in consistent large-cap stocks and 20% in convicted mid-cap stocks. Under efficient management, the fund has successfully outperformed its benchmark over the period of 7-years.
If you would have invested Rs.1,00,000 in this fund 7 years ago, the accumulated corpus would have been Rs.3,06,100 (Considering 17.33% CAGR, as of January 20, 2020)
- The managers have undergone critical analysis to identify companies with competitive advantage (stocks with solid pricing power) and high quality businesses such as HDFC Bank, ICICI Bank, Reliance Industries, etc., to get desired returns
- There are 59 stocks in the fund’s portfolio with major allocation into Financial, Energy, Technology and FMCG sectors
- If you are expecting higher returns which are able to beat inflation comfortably, you must keep yourself invested for at least 3 years
- Investments can be made with a minimum amount of Rs.5000 (for lumpsum) and Rs.1000 (SIP)
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2. Axis Bluechip Fund
This fund consists of a diversified portfolio with 81.57% of total assets invested in Indian stocks out of which 72% are allocated into large cap stocks and 0.37% into mid cap stocks. The predominance of large cap stocks makes it a less volatile fund giving inflation beating returns if invested for at least 3 to 5 years.
If you would have invested Rs.50,000 in this fund 7 years ago, the accumulated corpus would have been Rs.1,41,225 (Considering 15.99% CAGR, as on January 20)
- The portfolio valuations shows 25 stocks placed in Financial, Technology, FMCG and Energy sectors. And, HDFC Bank, Kotak Mahindra Bank, ICICI Bank, Bajaj Finance Ltd. and Reliance Industries are the top 5 holdings
- The fund managers have employed a passive approach towards portfolio analysis with an intent to generate equal or higher returns than the benchmark. And, the strategy has been successful as the fund has generated higher returns than the benchmark over 1-7 years
- This fund is suitable for investors with a long term financial goal, seeking investments into financial sector
3. ICICI Prudential Bluechip Fund
This fund works around the objective of accruing long term capital appreciation and fixed income to the investors from equity portfolio predominantly invested in large cap stocks. It is a high risk fund with historically higher returns. As on January 20, 2020, there are more than 25 Crore assets invested in this fund.
If you would have invested Rs.1,00,000 for 7-years in this fund, the accumulated corpus would have been Rs.2,50,996 (Considering 14.05% CAGR, as on January 20)
- There are 55 stocks in the portfolio of the fund with top holdings such as HDFC Bank, ICICI Bank, Infosys, Axis Bank and Bharti Airtel
- The top 5 sectors of allocation include Financial & Insurance Activities, Computer Programming Consultancy & related Activities, Manufacturing of Coke and refined Petroleum products, Infrastructure and Manufacture of Tobacco products
- It is suggested that the investors should keep themselves invested for a period of 3 to 5 years to obtain inflation beating returns
4. SBI Bluechip Fund
This fund aims at providing the investors with long-term capital growth opportunities by employing an active management in a diversified basket of large cap stocks. It has a minimum 80% of stocks allocated in large cap companies with a good brand quality. Moreover, it has the flexibility to invest a maximum of 20% in debt or money market instruments.
If you would have invested Rs.90,000 for 7-years in this fund, the accumulated corpus would have been Rs.2,35,351 (Considering the 14.72% CAGR, as of January 20)
- The fund managers have strategically used a combination of growth and value style of investing with top-down and bottom-up approach for selection of stocks
- There is a total of 52 stocks with top holdings in HDFC Bank, ICICI Bank, ITC, Larsen & Toubro and Nestle India
- Investors who are willing to invest their corpus in equity sector, for a long term capital accumulation can invest in this fund
5. Nippon India Large Cap Fund
Nippon India Large Cap Fund has invested a major portion of the total assets into Large cap stocks of State Bank of India, ICICI Bank, Larsen & Toubro, Infosys etc. The secondary objective of this fund is to accrue steady returns by investing in debt and money market securities.
If you would have invested Rs.1,00,000 for 7-years in this fund, the accumulated corpus would have been Rs.2,57,223 (Considering the 14.45% CAGR, as of January 20)
- There are 47 stocks in the fund’s portfolio and the chosen sectors of investment are Finance, Energy, Automobile, Engineering and Technology
- An ideal investment into the fund would be for a period of 3-5 years for capital appreciation. It is advisable to stay invested for a medium to long term owing to recent market fluctuations
- The minimum investment amount required to enter the fund is Rs.100 with 1% exit load applied on redemption within 1 year of investment
Advantages of investing in Large Cap Mutual Funds
- As you invest in Large Cap Mutual Funds, your fund’s portfolio is exposed to stability and sanity in which the chances of any hindrances in the revenue-generation or insolvency are low. On the other hand, small cap & mid cap companies are comparatively more affected by instability in the market
- When the investments are made into companies with high growth potential and solid track record, the payments of dividend are consistent. As a result, the steady dividend payments give appealing returns to the investors
- Because the large companies have been functioning in the market for many years, the performance valuation, profits and other financial specifications become easy for the investors
How to Invest in Large Cap Mutual Funds?
There are different methods through which one can invest in large cap stocks:
- Offline mode– Visiting the nearest branch office of the fund house and investing in the desired scheme. You must carry all the required documents such as Identity Proof, Address Proof, Cancelled Cheque, Passport size photos, PAN Card and KYC Documents handy. You can also invest offline through a broker. However, this would then be a regular fund and not a direct fund. Think of it like a charge brokerage which gets deducted from the total investment amount.
- Online Portal– If you want a hassle free mode of investing with no commissions and brokerage, you can choose websites like Paisabazaar.com which allow the investors to compare more than 1,700 funds at one platform instead of visiting the website of each Asset Management Company (AMC) and then searching for numerous funds. You can select the fund in which you want to invest, look at the details and compare similar schemes as well as use SIP Calculator or Lumpsum Calculator to estimate the future value of your investment
Frequently Asked Questions
Q.1: Is it good to invest in Large Cap Funds?
Ans: If you are willing to invest for long-term and get higher return, large cap funds are best for investment. Moreover, they are suitable for conservative investors who are not willing to take risks. Large cap funds also bring stability to the portfolio with steady returns.
Q.2: Which mutual fund category is better for long term returns?
Ans: If you are looking for option to invest for a longer period of time, you can opt for large cap funds as these will give enough time for your money to grow and give higher returns. However, small cap funds are also good investment option to get steady returns.
Q.3: Which mutual fund category is better large cap or multicap?
Ans: Multi cap funds invest across market capitalisation and sectors, according to what the fund manager decides. On the other hand, large cap funds invest solely into large cap companies. Hence, multi cap funds could provide one with a diverse portfolio whereas, in the case of large cap funds, schemes may get affected because there can be no deviation from the planned portfolio.
Q.4: Is a large cap high risk?
Ans: No, as compared to small cap and mid cap funds, large cap are less volatile during market fluctuations because they invest in companies with high growth potential and solid business plans. Nonetheless, they invest in equity hence some risk is involved.
Q.5: What is the difference between large cap and mid cap?
Ans: Mid caps are basically companies that lie between the 101st-250th largest companies in terms of market capitalization whereas large caps are top 100 companies in terms of market capitalisation. Besides this, Mid caps are riskier than large cap stocks but offer more growth potential than large caps.