What are Large Cap Funds
Large Cap Mutual Funds are open-ended equity schemes, which primarily invest in large cap companies. These funds have to invest at least 80% of their total assets in equity and equity related instruments of large cap companies. According to SEBI, top 100 companies in terms of full market capitalisation are categorized as large cap companies.
Why invest in large cap funds?
Large cap companies usually have a sustainable market share and competitive edge in their respective segments. These companies have steady cash flows and strong balance sheets, which makes them better positioned to deal with tough times. These companies are also traded more frequently and hence, are more liquid. All these factors make large cap companies less volatile and more capable of withstanding market downturns. Thus, by investing in large cap funds, investors will save themselves from the perils of undertaking independent stock selection while benefiting from a diversified portfolio consisting of top Indian companies.
Ideally, large cap funds should constitute the core, at least 50%, of one’s equity portfolio. Those with lower risk appetite can consider higher exposure to large cap funds.
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Top 10 Large Cap Mutual Funds for 2020
|Fund Name||Returns (%)|
|Mirae Asset Large Cap Fund||9.09||7.00||12.87||17.11||13.10|
|Axis Bluechip Fund||13.91||13.13||13.73||15.48||11.96|
|ICICI Prudential Bluechip Fund||8.41||5.51||10.62||13.58||10.92|
|SBI Bluechip Fund||10.24||5.92||10.09||15.09||11.29|
|Nippon India Large Cap Fund||-1.65||1.79||8.10||13.83||9.93|
|IDFC Large Cap||11.34||5.94||10.82||11.29||8.34|
|HDFC Top 100||-0.84||2.01||8.65||12.22||8.31|
|L&T India Large Cap||7.34||6.04||9.17||12.83||9.09|
|Invesco India Large cap||9.83||6.47||9.73||13.28||9.55|
|Benchmark Index (S&P BSE 100 TRI)||10.84||7.95||11.93||13.34||9.70|
|(Large cap funds)|
(Data as on November 24th 2020 Source- Value Research)
1. Mirae Asset Large Cap Fund
This fund invests in sector leaders with high quality businesses, strong pricing advantage and sustainable competitive advantage. It has the flexibility to invest across various sectors and themes. It can also hold up to 20% of its portfolio in a few high conviction midcap companies to add to the consistent returns from large cap companies.
2. Axis Bluechip Fund
The scheme aims to outperform its benchmark while containing the market risk at lower level than its benchmark. Its stock selection is primarily based on the sustainable earnings growth potential of stocks from a medium term perspective. For stock selection, the fund follows a bottom-up approach based on their business fundamentals.
3. ICICI Prudential Bluechip Fund
This fund primarily invests in large cap companies with quality management, good growth potential, strong fundamentals and a proven track record. It follows the ‘benchmark hugging’ strategy to ensure portfolio diversification and reduce concentration risk. It adopts a ‘buy and hold’ approach for investing while using bottom-up approach for stock selection. The fund also takes aggressive exposure to high conviction scrips to generate higher returns.
4. SBI Bluechip Fund
This scheme primarily invests in large cap stocks with good brand equity and possibly market leaders in their segments. It may also invest up to 20% of its portfolio in equities other than large cap and/or in debt and money market instruments. The fund follows a combination of both growth and value style of investing along with a mix of top-down and bottom-up approach for stock selection across different sectors.
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5. Nippon India Large Cap Fund
This scheme primarily invests in large cap companies, which are market leaders or potential market leaders in their respective fields with established business models and sustainable free cash flows. It aims to create alpha by investing in the best companies in the benchmark index at reasonable valuation and relatively better return on equity. The fund is aiming to benefit from domestic revival by making allocations to themes like urban discretionary and short-cycle capital expenditures. It is currently overweight on industrial capital goods and consumer discretionary.
6. Franklin India Blue Chip Fund
This scheme aims at long term wealth generation by adopting an active investment strategy with defensive and aggressive postures on the basis of prevailing market conditions and opportunities. It involves a blend of both value and growth style of investing with a bottom up approach for stock selection across different sectors.
7. IDFC Large Cap Fund
This fund invests predominantly in large cap companies, with an opportunistic allocation to mid and small cap ones not exceeding 20% of the fund portfolio. The aim is to generate consistent returns with low volatility while trying to generate additional alpha.
The fund follows a robust three pillar approach – buying the right sectors, buying the sector leaders and tactical allocation to mid/small caps – for stock selection. To beat its benchmark index, the fund is open to adopt a large scale deviation from the sectoral weight of its benchmark index. Within the sectors identified, the fund aims at identifying and investing in the sector leaders with strong business fundamentals, a robust track record of execution and a strong financials to survive cyclical downturns.
Its tactical allocation to mid/small cap companies is aimed at benefiting from opportunities arising out of stock mispricing and benevolent risk-on environment. The fund’s investment style is based on growth and quality with preference given to companies with strong earnings and healthy returns on capital employed.
8. HDFC Top 100 Fund
This scheme aims at a building a diversified portfolio across key sectors and economic variables. It takes active positions in a controlled manner to reduce the market risks of its portfolio. The fund has successfully navigated market bubbles and excesses and has maintained a low portfolio turnover ratio due to its long term approach to investing.
9. L&T India Large Cap Fund
This fund predominantly invests in large cap stocks without any sector bias. It uses its time-tested processes and in-depth market research to identify large cap companies with strong fundamentals. It prefers stocks having higher stability and less volatility with relatively quicker growth potential than the rest of the market.
10. Invesco India large Cap Fund
This scheme uses thorough research to pick up best large cap companies having the potential to deliver consistent benchmark-beating returns. It prefers growth stocks and aims to beat its benchmark’s returns through stock selection and sectoral allocation. The scheme does not take any cash call, which means it always takes the ‘fully invested’ approach.