Best Large Cap funds for 2024

Tanushree Jaiswal Tanushree Jaiswal 17th January 2024 - 03:49 pm
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Large-cap mutual funds are going to have their moment in 2024. 

As per a report by Business Standard, investors should expect lower returns from mid and small-cap equity mutual funds in 2024 due to high valuations and a lack of positive triggers. The spotlight is going to be on Large cap funds. 

Large cap funds are mutual funds that invest mostly in big companies with large market capitalisation.They're known for giving good returns while being less jumpy compared to mid and small-cap funds. These funds put your money into big companies' stocks. People happily invest in them even if the share prices of these top-notch companies are on the higher side. Picking the right large-cap mutual fund is a big deal, so let's dive into why they're good, how to pick the best ones, and a list of the top 10 to consider for 2024.

Understanding Large Cap Funds

Large-cap funds focus on investing in stocks from big companies, usually those with a market capitalisation of over Rs. 20,000 crore. They want you to be part of the biggest and most stable players in the stock market. These stocks are often called "blue-chip" stocks, signifying companies with a long history of solid earnings and a strong financial position. Since these are big established companies the share price of these companies are less volatile than mid and small cap companies, making large-cap mutual funds a favorite for those who want a more stable and less risky investment. Plus, they offer a chance for long-term growth since these companies are often leaders in their industries.

Selecting Optimal Large Cap Funds

Choosing the right large-cap mutual fund isn't a walk in the park. Some do well, others not so much. Here's what you should consider:

Quantitative Aspects:

Start with the mutual fund rating. Look at other things like how long the fund has been around, how much money it manages (AUM), past returns, and the expense ratio.
Check how the fund has been performing in the last three years.
The fund should have more than INR 1000 crore in net assets and at least 65 percent of its money should be in large-cap stocks over the past year.

Qualitative Considerations:

Look beyond the numbers. See who's managing the fund and check their track record.

Top 11 Best Performing Large Cap Mutual Funds FY 23-24:

Let's peek at how the top performing funds of 2023

Scheme Name 

AuM (Cr) 

6M 1Y 3Y 5Y 10Y
Nippon India Large Cap Fund - Direct Plan - Growth                20,217.64 19.02% 36.51% 24.52% 18.32% 18.65%
Bank of India Bluechip Fund - Direct Plan - Growth 114.71 23.79% 36.25% - - -
Invesco India Largecap Fund - Direct Plan - Growth 909.48 17.42% 33.83% 18.95% 17.70% 16.86%
JM Large Cap Fund - (Direct) - Growth 73.80 22.17% 33.67% 18.78% 16.98% 15.55%
HDFC Top 100 Fund - Direct Plan - Growth 30,261.72 20.21% 33.33% 21.72% 17.06% 16.59%
Quant Large Cap Fund - Direct Plan - Growth 424.63 24.12% 32.97% - - -
Bandhan Large Cap Fund - Direct Plan - Growth 1,299.07 17.76% 32.63% 16.63% 17.05% 14.74%
ICICI Prudential Bluechip Fund - Direct Plan - Growth 47,928.62 19.36% 30.66% 19.88% 18.11% 17.12%
ITI Large Cap Fund - Direct Plan - Growth 225.97 18.19% 30.21% 16.54% - -
Edelweiss Large Cap Fund - Direct Plan - Growth 685.68 15.32% 29.63% 17.42% 18.20% 16.35%
HSBC Large Cap Fund - Direct Plan - Growth 1,678.16 16.99% 29.40% 15.28% 16.81% 15.12%
DSP Top 100 Equity Fund - Direct Plan - Growth 3,340.00 17.10% 29.10% 14.85% 15.16% 13.85%
Baroda BNP Paribas Large Cap Fund - Direct Plan - Growth 1,693.42 17.79% 29.09% 16.89% 18.49% 17.09%
WhiteOak Capital Large Cap Fund - Direct Plan - Growth 0.00 16.41% 28.75% - - -

Features of Large Cap funds

Stability:

Large-cap funds offer stability as they meticulously select companies with robust histories, ensuring stability even when faced with market fluctuations.

Consistent Returns:

Similar to a reliable companion, these funds deliver steadfast returns.
Navigating Market Swings:
Since these companies are well established and have huge legacies, there are share prices are less volatile than other stocks, hence investments in these funds are less likely to give you shocks or bad surprises.

Balanced Risk Spectrum:

While no investment avenue is entirely devoid of risk, large-cap funds present a judiciously manageable level of risk – akin to a calculated and well-thought-out challenge.

Crucial Considerations Before Embarking:

Before delving into the realm of large-cap funds, it is imperative to grasp these fundamental aspects:

Comprehend the associated risks, although comparatively lower than funds involving smaller companies.

Scrutinize the expense ratio, recognizing that a lower ratio typically aligns more favorably with your financial objectives.

Exercise patience; commit to a minimum investment horizon of three to five years.

Familiarize yourself with the tax implications – a 15% tax on short-term gains and a 10% tax on long-term gains, with an initial exemption of ₹1 lakh.

Merits of Large Cap Mutual Funds:

Investors are drawn to large-cap funds due to several compelling reasons:

1. Stability Anchored in Giants:
These funds find stability in large, well-established companies, offering a secure and dependable investment trajectory.

2. Supplementary Income through Dividends:
Many prominent companies distribute profits in the form of dividends, presenting an additional avenue for income.

3. Seamless Buying and Selling Dynamics:
Thanks to their widespread popularity, large-cap funds facilitate uncomplicated buying and selling transactions.

4. Proficient Fund Management:
Operated by financial experts, these funds instill a sense of confidence as seasoned professionals navigate the intricate investment landscape.

5. Risk Mitigation via Diversification:
Large-cap funds strategically diversify investments across various companies, effectively reducing associated risks.

6. Accessibility Through Brokerage Platforms:
Easily accessible through brokerage platforms, large-cap mutual funds cater to a diverse spectrum of investors.

7. Transparent Investment Landscape:
Routine evaluations of sizable companies contribute to heightened transparency, fostering confidence in investment decisions.

Functioning Mechanism of Large Cap Funds

Large-cap funds meticulously allocate investments in India's top 100 companies, emphasizing their market size. Strategic investment in industry giants, such as Reliance and Britannia, ensures alignment with stable and well-performing entities.

Who should invest in Large-cap funds?

Consider delving into large-cap mutual funds if you:

Seek stable returns without enduring extreme market fluctuations.
Aspire to construct a resilient portfolio characterized by favorable returns and meticulous risk management.
Embrace a long-term investment outlook, appreciating the steadiness provided by large-cap companies.

Tax Implications for Large Cap Funds:

Tax considerations hinge on the duration of your investment. Short-term gains (within a year) are subject to a 15% tax, while long-term gains (exceeding a year) incur a 10% tax, with an initial exemption of ₹1 lakh.

Also read about: Best Flexi Cap Funds for 2024

Conclusion

For investors in pursuit of a reliable journey intertwined with potential rewards, the finest large-cap mutual funds serve as a trusted ticket to a secure odyssey in the dynamic stock market. These funds underscore the value of aligning with well-established businesses, acting as unwavering anchors in the unpredictable realm of investments.
 

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Disclaimer: Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

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