Is the Time Ripe for Investment in Large Cap Mutual Funds?


  • Nifty 50 Index soars over 12% in 2019, does it call for investment in large cap funds?
  • Market experts say Yes, but do research on the fund's overall performance and its portfolio composition before investing in it

The year 2019 is regarded as one of the most volatile periods for India’s capital market. While the announcement of hiking the additional surcharge on foreign portfolio investors (FPI) took out nearly ₹22,000 crores from the equity market till the time the government rolled it back, the corporate tax rate cut elevated the market to new highs. Amidst all the volatility, BSE Sensex and NSE Nifty have recorded sharp gains and are above the mutual funds that have these indices as the benchmark. While Sensex jumped 14.4%, Nifty rose by 12% in the past year, reflecting the positive sentiment amidst an economic slump wherein the Gross Domestic Product (GDP) has fallen below 5%.

A lot of credit should go to the strong fundamentals and sound operational efficiencies of some large-cap companies that are listed in these indices. The stocks of these companies don’t fluctuate the way that of others. If news reports are to be believed, large cap companies listed in the Nifty 50 Index are likely to post healthy results in Q3 ending December 2019, in the wake of a corporate tax rate cut and other steps taken by the government.

This makes it ripe for investment in these company stocks. For more diversification, you can invest in these companies via mutual funds and benefit from the expertise of a fund manager having years of experience. But which large-cap fund should you select and how will you do so? For that, you can take the help of this post.

How Will You Go About Choosing Large Cap Funds?

Don’t just choose a large-cap fund for the sake of it, research, analyze and take the right call. If you can’t do it on your own, we tell you to first go online, check the Nifty 50 companies and see their periodical performance. Although these stocks are less volatile, not every one of them will be doing well. So, you need to check the weightage of stocks that are there in the portfolio. Go for large-cap funds that have a higher weightage of performing stocks.

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So, Which are Those Stocks That Helped Nifty 50 Rally in 2019?

Large Cap Stocks Stock Price on Jan 1, 2019 (In ₹)Stock Price on Dec 31, 2019 (In ₹)Rate of Appreciation (In ₹)
Titan Company9281187.9528.01%
ICICI Bank363.75538.948.15%
Reliance Industries Ltd.11211514.0535.06%

Note – Data sourced from Money Control.

Which Large Cap Mutual Funds Should You Invest in?

Taking the performance and asset portfolio mix into consideration, we have come with the following list of large-cap mutual funds.

Large Cap Funds1-year Return3-year Return5-year Return10-year Return
Axis Bluechip Fund17.95%19.44%10.68%12.10%
Nippon India Large Cap Fund6.69%13.23%9.03%13.24%
HDFC Top 100 Fund6.84%11.54%7.92%10.49%
ICICI Prudential Bluechip Fund9.96%12.29%9.52%12.27%
Aditya Birla Sun Life Focused Equity Fund11.68%11.16%13.06%11.56%

Note – Data sourced from Value Research as on Jan 7, 2020.