Large-cap funds invest in the largest Indian companies listed on the stock exchange. These are also called blue chip stocks and are among the best companies in the country. Some examples of large-cap companies are HDFC Bank, Infosys, Reliance, TCS, Hindustan unilever etc. As per SEBI’s definition, large-cap companies are the top 100 companies by market capitalization, so the 1st to the 100th stock in size is the large cap universe. These stocks are also reflective of the economy since most of their products and services are consumed by many of us. Large-cap stocks moving up is a sign of these businesses doing well and expected economic growth.
These funds are a core holding of any equity portfolio, if you are looking to invest in equity mutual funds, a part of it should be invested in large-cap funds. These funds are relatively less risky than small and mid-cap funds since investment is into large-cap or blue-chip stocks. There are 40 odd large-cap funds offered by different mutual funds, so it is tough to figure out which are the best. Based on various factors such as past performance, expense ratio, risk and return metrics, these are the three best large-cap mutual funds we recommend:
- Axis Blue Chip Fund- This fund is offered by Axis Mutual Fund and invests in the best quality large-cap companies in India which exhibit a high growth potential. The fund’s objective is to deliver consistent returns which it has done so far. It has beaten its benchmark-Nifty 50 comfortably over the years. This fund has been rated five stars by Value Research.
- Mirae Asset Large Cap Fund- This fund is offered by Mirae Mutual Fund which is one of the largest asset management companies in Asia and a Korean financial services giant. This fund has been into existence for the last 12 years and has beaten its benchmark-Nifty 100 since then. The fund ‘s philosophy is to invest in companies that offer high growth potential, have low debt and good management. This fund is also rated five stars by Value Research.
- ICICI Prudential Bluechip Fund- This fund is offered by the ICICI Prudential Mutual Fund which is one of the largest fund management companies in India. This fund has been around for the last 12 years and manages assets of more than INR 20,000 crores. This fund has also been a consistent performer and beaten its benchmark most times. Value Research gives a four-star rating to this fund.
Most of the equity funds including large-cap funds have underperformed and given negative returns in the last year owing to correction in stock markets. The returns have come down in 2020 due to the impact of covid on financial markets. However, it is a good time to invest in large-cap funds to take advantage of the low prices and build portfolios. We recommend splitting your money in these three funds.