Introduction
Mutual funds are a well-known investment vehicle. They pool money from several investors to allocate to a diversified portfolio of stocks, commodities, bonds, and other securities. Mutual funds are categorised into small-cap, mid-cap, large-cap, multi-cap, and flexi-cap funds based on the market capitalisation of companies.
Large-cap funds, in particular, invest in companies with a significant market capitalisation. In 2024, the selection of large-cap funds is crucial to maintaining a balanced and profitable portfolio.
What is a large-cap fund?
Large-cap funds allocate your money into stocks of established companies, such as those whose market capitalisation exceeds Rs. 20,000 crore. The fund ensures you are invested in the market’s biggest and most stable players. The stocks are often referred to as “blue chip” stocks, indicating that the companies have been generating solid earnings for a long period and hold a strong financial position.
The companies under large-cap funds are mostly industry leaders. As a result, their share price is less volatile than small and mid-cap companies. Large-cap investments are stable, but you must also understand the potential risks. These stocks may have a slower growth than small and mid-cap companies.
How do large-cap mutual funds work?
When you invest in large-cap funds, your money is invested in the top 100 companies based on market capitalisation. These companies include some of the country’s most renowned brands, such as ITC, Reliance, HUL, P&G, Britannia, etc. According to regulations, large-cap funds must allocate a minimum of 80% of their assets to the top 100 companies.
Five best-performing large-cap funds for investing in 2024
The following funds have performed well in the last year. They are suitable investments if you want to earn high returns and can wait for at least three to four years. However, you must also be prepared for moderate losses in your investments.
1. Nippon India Large Cap Fund Direct-Growth
Nippon India Large Cap Fund is the open-ended equities scheme fund launched by Nippon India Mutual Fund on June 12, 2007. As of January 31, 2024, it had assets under management (AUM) worth Rs. 21,454 crore. The allocation of funds is 98.41% in domestic equities, from which 2.59% are in small-cap stocks, 13.69% in mid-cap stocks, and 63.68% in large-cap stocks.
2. JM Large Cap Fund
JM Large Cap Fund has an investment of 97.47% in domestic equities, split into small-cap stocks (3.33%), mid-cap stocks (10.45%), and large-cap stocks (63.23%). As of January 31, 2024, JM Large Cap Fund had an AUM worth Rs. 81 crore. Its top holdings include companies like Infosys, HDFC Bank, Larsen & Toubro, Bank of Baroda, Tata Motors Ltd., etc.
3. Quant Large Cap Fund - Direct Plan
Quant Large Cap Fund is an open-ended equities scheme made available for investors on April 14, 1996. It has most of its investments in large-cap stocks, 37.62% out of the 73.57% in domestic equities. As of January 31, 2024, the AUM of the fund was Rs. 535 crore. The fund’s top holdings include Reliance, LIC, Britannia, JIO Financial Services, Adani Power, etc.
4. Bank of India Bluechip Fund - Direct Plan
Bank of India Bluechip Fund was launched on June 29, 2021. From its 95.48% investment in domestic equities, it has allocated 61.95% to large-cap stocks. The fund’s AUM was worth Rs. 122 crore as of January 31, 2024. Its top holdings include HDFC Bank, NTPC, Reliance, Bank of Baroda, Larsen & Toubro, etc.
5. Canara Robeco Bluechip Equity Fund
Canara Robeco Bluechip Equity Fund has 96.37% investment in domestic equities, out of which large-cap stocks have 73.21%. Its AUM, as of January 31, 2024, was worth Rs. 11,823 crore. It includes ICICI Bank, Reliance, Infosys, etc., in its top holdings.
Conclusion
Large-cap funds invest in companies that are often leaders in their industries. They provide a chance for long-term growth and are often preferred by investors seeking a more stable and less risky investment. It isn’t easy to pick optimal large-cap funds. You must evaluate quantitative aspects like AUM, past returns, and the expense ratio. You must also look into qualitative considerations like checking who manages the fund and their track record.