The Nifty 50 has recorded a single-digit growth of 7.4% so far in the current calendar year (as of November 19, 2024) after growing 18.7% in the CY 2023. The index had a great run for most part of the year until global and domestic headwinds gripped the markets from October 2024 onwards.
During this period, Large Cap Mutual Funds generated an average return of 14.9%, outpacing the Nifty 50 – TRI index growth of 9.5% by about 5.5 percentage points and the Nifty 100 – TRI returns of 12.4%, indicating that growth in the large-cap segment was broad-based and not just limited to index heavyweights.
Popular Large Cap Funds in India
| Fund Name | AUM (Cr) |
| ICICI Pru Bluechip Fund | 63,670 |
| SBI BlueChip Fund | 50,447 |
| Mirae Asset Large Cap Fund | 39,337 |
| HDFC Top 100 Fund | 36,467 |
| Nippon India Large Cap Fund | 34,105 |
| Axis Bluechip Fund | 33,236 |
| Aditya Birla SL Frontline Equity Fund | 29,395 |
| Canara Rob Bluechip Equity Fund | 14,581 |
| UTI Large Cap Fund | 12,842 |
| Kotak Bluechip Fund | 9,327 |
The securities quoted are for illustration only and are not recommendatory.
AUM data as of October 31, 2024
(Source: ACE MF, data collated by PersonalFN)
In this article explore the best Large Cap Funds for 2025 in the last three years based on rolling returns. But first, let us first look at the basics of the category.
What are Large Cap Funds?
As per SEBI definition, Large Cap Funds are equity mutual funds that invest a minimum of 80% of their assets in the top 100 companies by market capitalisation. Large-cap companies also known as bluechip companies are usually well-established, financially sound, and are generally market leaders in their respective fields. Due to these characteristics, large-cap stocks are known for their ability to steadily compound wealth over a period even though they may not have very high growth potential that is usually linked with small and mid-sized companies.
What is the outlook for Large Cap Funds in 2025?
Market experts are of the view that Sensex could potentially cross the key milestone of 1,00,000 in the next couple of years. While this is a possibility, one must remember that journey may not be a smooth one – the index may even touch the 70,000 level before bouncing back. This is because there are lot of uncertainty in play related to geopolitical tensions, India Inc.’s weak corporate earnings growth in Q2 FY2025, shift in US political dynamics, uncertainties about the inflation outlook, etc. Theses factors, coupled with the expensive valuation in the Indian market, have resulted in FIIs shifting focus to other emerging markets such as China.
Historical Nifty 50 level and Nifty 50 P/E ratio
Data as of November 19, 2024
Past performance is not an indicator for future returns
(Source: niftyindices.com, ACE MF, data collated by PersonalFN)
The higher volatility is expected to continue in the near term. Going ahead, while the government capital expenditure was slow in the first half of the fiscal, it is expected to pick up post state elections. Additionally, a favourable monsoon season and better prospects of Kharif crops are expected to boost rural spending, subsequently driving up consumption growth.
FIIs are also expected to make a comeback as market experts are of the view that they see China as a short-term play while they view India as secular long-term growth story.
Notably, amid recent corrections the valuations have cooled off a bit and now appear to be in line with the long-term historical average. Furthermore, unlike mid and small-cap stocks, the large-cap segment currently offers a better margin of safety.
Should investors consider investing in Large Cap Funds in 2025?
Large Cap Funds have proved their ability to stable returns across market phases. These funds are less likely to be impacted by any potential economic slowdown and market correction.
If the market continues to witness high volatility in 2025, Large Cap Funds may show better resilience compared to Mid and Small Cap Funds. Therefore, Large Cap Funds should form part of the Core equity portfolio of every investor. Individuals can decide the percentage of Large Cap Fund allocation in the portfolio depending on various factors such as an individual’s financial goals, risk appetite, and investment horizon.
Conservative investors and investors with moderate risk appetite can consider holding higher allocation to Large Cap Funds (around 50-70% or more of their equity portfolio), and the balance can be in Mid-cap Funds, Value Funds, Flexi Cap Funds, etc.
On the other hand, aggressive investors can consider allocating 30-50% of their equity assets in Large Cap Funds. One should ideally avoid investing in Large Cap Mutual Funds with a short-term investment horizon of, say, 6 months, 1 year, or 2 years.
How are Large Cap Mutual Funds taxed?
As per the proposals made in the Union Budget for 2024-25, capitals gains tax on equity mutual funds has been revised. The holding period for Large Cap Mutual Funds from a tax perspective will continue to be 12 months. If you sell your large cap fund units before 12 months, the gains will be subject to short-term capital gains (STCG) tax of 20% compared to 15% earlier.
On the other hand, if you sell your Large Cap Fund units after completing one year, the gains will be subject to long-term capital gains (LTCG) tax of 12.5% compared to 10% earlier, but only if the gains exceed Rs 1.25 Lakh in a financial year.
Which are the best Large Cap Funds for 2025?
Best Large Cap Fund for 2025 #1: Nippon India Large Cap Fund
Nippon India Large Cap Fund is among the popular schemes in the Large Cap Fund category that excels in selecting stocks with high growth potential. Launched in August 2007, the fund favours large-cap stocks while maintaining a tactical exposure to mid-cap segments.
Nippon India Large Cap Fund has exceeded expectations, particularly in rising markets, and has consistently delivered superior returns compared to many peers. Though the fund faced a challenging phase between 2019 and 2020, it has demonstrated a remarkable turnaround in the last few years, emerging as one of the top quartile performers in its category.
Growth of Rs 10,000 invested in Nippon India Large Cap Fund three years ago
The securities quoted are for illustration only and are not recommendatory.
Past performance is not an indicator of future returns
Data as of November 19, 2024
(Source: ACE MF, data collated by PersonalFN)
Under the stewardship of Mr Shailesh Raj Bhan, Nippon India Large Cap Fund’s NAV has seen an impressive CAGR of 24.4% over the last three years, which is the highest in the category, and outpaces the benchmark BSE 100 – TRI’s CAGR of 17%.
The fund’s top stock holdings include popular large-cap names such as HDFC Bank, ICICI Bank, Reliance Industries, ITC, and Infosys. The Banking & Finance sector makes up a major part of its assets, while Infotech, Consumption, Power, and Petroleum, are among the other prominent sectors in the fund’s portfolio.
Top holdings of Nippon India Large Cap Fund
Holding in (%) as of October 31, 2024
(Source: ACE MF, data collated by PersonalFN)
Nippon India Large Cap Fund focuses on long-term growth by identifying high-growth-potential stocks using a ‘Growth At Reasonable Price’ strategy. Rather than chasing market trends, the fund seeks high-growth opportunities within large caps and across different market segments.
Click here to read the detailed analysis of Nippon India Large Cap Fund.
Best Large Cap Fund for 2025 #2: HDFC Top 100 Fund
HDFC Top 100 Fund is one of the most popular Large Cap Funds known for its strong performance during bull markets. The fund has successfully recovered from a long period of underperformance between 2019 and 2020 and returned to its previous high standards by focusing on fundamentally strong large-cap stocks.
Launched in September 1996, HDFC Top 100 Fund follows a buy-and-hold investment strategy, concentrating on high-conviction large-cap stocks and avoiding momentum-driven picks, even if this means experiencing periods of slower growth.
Growth of Rs 10,000 invested in HDFC Top 100 Fund three years ago
The securities quoted are for illustration only and are not recommendatory.
Past performance is not an indicator of future returns
Data as of November 19, 2024
(Source: ACE MF, data collated by PersonalFN)
Over the past three years, HDFC Top 100 Fund has achieved a CAGR of about 21.2% on a rolling return basis, outperforming the benchmark Nifty 100 – TRI, which has a CAGR of 16.2%.
Among its top holdings, the fund had notable investments in major large-cap companies such as ICICI Bank, HDFC Bank, NTPC, L&T, and Bharti Airtel. HDFC Top 100 Fund’s portfolio is notably focused on the Banking & Finance sector, while it also has significant investments in Auto & Auto Ancillaries, Infotech, Healthcare, Consumption, and Power.
Top holdings of HDFC Top 100 Fund
Holding in (%) as of October 31, 2024
(Source: ACE MF, data collated by PersonalFN)
It is noteworthy that HDFC Top 100 Fund’s high-conviction strategy might lead to short-term underperformance during phases when its prominent investment bets are out of favour or during momentum-driven market rallies. However, its commitment to a well-diversified portfolio of fundamentally strong stocks positions it for solid long-term gains.
Click here to read the detailed analysis of HDFC Top 100 Fund.
Best Large Cap Fund for 2025 #3: ICICI Pru Bluechip Fund
ICICI Pru Bluechip Fund is the largest scheme in the Large Cap Fund category. Since its launch in May 2008, ICICI Prudential Bluechip Fund boasts a track record of demonstrating consistent performance and delivering robust returns over the long run. The fund has achieved this by strategically investing in fundamentally strong stocks within the large-cap domain.
Adhering to its large cap mandate, ICICI Prudential Bluechip Fund strategically invests in a diverse portfolio of large-sized and well-established companies, selected without any sector bias. The fund’s approach involves identifying high-growth potential stocks available at reasonable valuations.
Growth of Rs 10,000 invested in ICICI Pru Bluechip Fund three years ago
The securities quoted are for illustration only and are not recommendatory.
Past performance is not an indicator of future returns
Data as of November 19, 2024
(Source: ACE MF, data collated by PersonalFN)
Over the past five years, the fund has exhibited a commendable appreciation at a CAGR of 20.9%, surpassing its benchmark Nifty 100 – TRI, which recorded a 16.2% CAGR.
The fund held its major exposure in index heavyweights such as HDFC Bank, ICICI Bank, L&T, Infosys, and Reliance Industries. In terms of sector, ICICI Prudential Bluechip Fund’s portfolio is skewed towards Banking & Finance along with diversification in Auto & Auto Ancillaries, Infotech, Petroleum, and Infrastructure.
Top holdings of ICICI Pru Bluechip Fund
Holding in (%) as of October 31, 2024
(Source: ACE MF, data collated by PersonalFN)
ICICI Prudential Bluechip Fund has demonstrated a consistent ability to identify fundamentally strong stocks within the large-cap space. The fund’s strategy focuses on minimising volatility by constructing a well-diversified portfolio across sectors with a long-term view, emphasising stocks with a competitive edge and sustainable market share.
Click here to read the detailed analysis of ICICI Pru Bluechip Fund.
Conclusion…
With mid and small-cap stocks showcasing stellar run in recent years, numerous investors have been embracing risky investments while simultaneously shunning the stability and high liquidity of Large Cap Funds. However, one should remember that Large Cap Funds comprise well-established companies that can offer steady returns over the long run.
Even though Large Cap Funds may not offer very high returns, they can offer better protection against downside risk compared to Mid Cap Funds and Small Cap Funds, thereby rewarding investors with satisfactory gains over the long run. Due to this characteristic, Large Cap Funds can ideally form part of the ‘Core’ portfolio of every investor.
That said, Large Cap Fund investments are not without risk; they too are prone to market fluctuations. Thus, one should have a long-term investment horizon of at least 3-5 years when investing in Large Cap Funds. One can consider the SIP mode to invest in Large Cap Funds as it inculcates the habit of disciplined investing and negates the need of timing the market.
Watch this video to find out if Large Cap Funds make more sense in an overheated market: https://www.youtube.com/embed/uMqLea5K-XM?si=NTnoDVkr8ZCOS4ZO
Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.
The securities quoted are for illustration only and are not recommendatory.
This article first appeared on PersonalFN here
