Welcome to PersonalFN’s weekly analysis on diversified equity mutual funds! In this issue, we have analysed HDFC Large Cap Fund, highlighting its performance, peer comparison, investment strategy, fundamentals, portfolio, and suitability.

HDFC Large Cap Fund is a popular Large Cap Fund known for its strong performance during bull markets. By focusing on fundamentally strong high-conviction large-cap stocks, the fund has proven its ability to capture long-term growth opportunities.

What is the growth of Rs 10,000 invested in HDFC Large Cap Fund five years ago

Past performance is not an indicator of future returns
Data as of March 24, 2025
(Source: ACE MF, data collated by PersonalFN) 

HDFC Large Cap Fund, previously known as HDFC Top 100 Fund, is a leading scheme in the Large Cap Fund category, known for its strong performance during market rallies. Launched in September 1996, the fund has a solid track record of over 28 years, with a notable CAGR of about 19% since inception. HDFC Large Cap Fund focuses on allocating around 90-95% of its assets in equity and equity-related instruments of the top 100 large-cap companies and the balance in mid and small caps. The fund gained significant popularity under its former manager, Mr Prashant Jain. Although Mr Jain left in July 2022, the fund’s performance remained stable under the new manager, Mr Rahul Baijal, who brings extensive experience and continues to use the ‘Growth at a Reasonable Price’ approach to stock selection.

The fund currently has a substantial AUM of Rs 33,913 crore, making it the fifth-largest scheme in its category. HDFC Large Cap 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. Over the past few years, the fund has seen various ups and downs, including some phases of underperformance. In 2015 and between 2019 and 2020, it faced challenges due to higher exposure to stocks and themes, such as Consumption and PSU stocks, which were out of favour for quite a long time. However, the fund made a strong recovery when these sectors rebounded in the latter half of 2020. HDFC Large Cap Fund now ranks among the above-average performers in its category across different time frames.

Over the past five years, HDFC Large Cap Fund has achieved a CAGR of about 29.1%, outperforming the benchmark Nifty 100 – TRI, which has a CAGR of 26.5%. An investment of Rs 10,000 in HDFC Large Cap Fund five years back would now be valued at Rs 35,899, compared to a valuation of Rs 32,355 in its benchmark.

How has HDFC Large Cap Fund performed on a rolling return basis?

Scheme Name	Corpus (Cr.)	1 Year	2 Year	3 Year	5 Year	7 Year	Std Dev	Sharpe
Nippon India Large Cap Fund	34,212	31.63	28.46	22.86	21.04	16.60	13.79	0.28
HDFC Large Cap Fund	33,913	27.20	24.57	19.58	18.53	14.72	13.09	0.23
ICICI Pru Bluechip Fund	60,177	31.01	25.53	19.56	20.33	16.14	12.52	0.24
JM Large Cap Fund	458	33.68	26.72	19.34	19.40	14.92	14.43	0.19
Baroda BNP Paribas Large Cap Fund	2,263	33.23	25.67	18.69	19.85	16.19	13.34	0.21
Invesco India Largecap Fund	1,229	32.66	25.49	17.64	19.56	15.87	14.71	0.17
Edelweiss Large Cap Fund	1,059	27.99	24.17	17.63	19.38	16.09	13.11	0.21
DSP Top 100 Equity Fund	4,519	31.96	25.67	17.03	16.87	13.29	12.48	0.27
Bandhan Large Cap Fund	1,634	31.05	24.25	16.77	18.83	14.77	14.71	0.16
Tata Large Cap Fund	2,267	27.75	22.60	16.56	18.03	14.46	13.60	0.17
Nifty 100 – TRI		25.58	19.68	14.75	17.34	14.39	14.02	0.13

The securities quoted are for illustration only and are not recommendatory.
Returns are on a rolling basis and in %. Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised. Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.
Data as of March 24, 2025
(Source: ACE MF, data collated by PersonalFN)
Please note, this table only represents the best-performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

Although HDFC Large Cap Fund’s high-conviction strategy can result in underperformance in the short run, it has helped the fund establish a strong long-term track record. Its prolonged underperformance during 2015 and later in 2019-20 led some investors to question its ability to recover. However, the fund has made a notable comeback in recent years. Over the last 2-years and 3-year periods, it has outperformed the benchmark Nifty 100 – TRI by around 4.8 percentage points and the category average by about 2-3.5 percentage points on a rolling return basis. This recent improvement has significantly boosted its long-term returns. The fund now ranks among the above-average performers in its category across various time frames and has maintained a strong position relative to the benchmark.

HDFC Large Cap Fund’s Standard Deviation, which measures volatility, is lower than the benchmark and broadly in line with the category average. In terms of risk-adjusted returns, as shown by the Sharpe ratio, the fund has outperformed majority of its peers and is much ahead of the benchmark.

[Read: Large Cap Funds vs Nifty Index Funds: Which is a Better Alternative in a Volatile Market?]

What is the investment strategy of HDFC Large Cap Fund?

Classified as a Large Cap fund, HDFC Large Cap Fund maintains a minimum exposure of 80% in large-cap stocks (top 100 companies by market capitalization). The fund has the flexibility to invest across sectors and economic variables. HDFC Large Cap Fund follows a blend of growth and value investment to deliver optimal returns at a reasonable risk level. While creating the portfolio, the fund manager adopts a bottom-up approach to pick stocks and blends it with the top-down approach to analyse macro trends. For the bottom-up stock selection process, the fund pays attention to company’s positioning and trends in business, sector, and valuation cycles.

The stock selection involves a 3-pronged framework that analyses each stock on key parameters such as strength of the business model, quality and experience of the management team, and financial metrics (RoE, RoCE, cash flows, balance sheet, etc.). The fund has high conviction in most of its stocks and holds them with a medium to long-term view. Accordingly, HDFC Large Cap Fund’s portfolio turnover ratio is usually around 15-20%.

What are the top portfolio holdings in HDFC Large Cap Fund?

Holding in (%) as of February 28, 2025
(Source: ACE MF, data collated by PersonalFN) 

HDFC Large Cap Fund typically maintains a well-diversified portfolio of about 45 to 50 stocks. As of February 28, 2025, the fund held 43 stocks, with significant exposure to key index heavyweights. The top 10 stocks made up 58.5% of the fund’s assets. Among these top holdings, the fund had notable investments in major large-cap companies such as HDFC Bank, ICICI Bank, L&T, Bharti Airtel, and Infosys. Many of these stocks have been part of the fund’s portfolio for several years.

HDFC Large Cap Fund’s high conviction on its prominent bets like ICICI Bank, Bharti Airtel, NTPC, Lupin, and L&T turned out to be highly rewarding in the last couple of years. The fund also benefitted from its holdings in stocks such as Coal India, Sun Pharma, Mahindra & Mahindra, SBI, Tata Motors, Infosys, Axis Bank, and HDFC Bank among others.

HDFC Large Cap Fund’s portfolio is notably skewed towards the Banking & Finance sector that form about 34.2% of its assets. The fund also has significant investments in Consumption, Infotech, and Auto that collectively make up 27.8% of its assets. Other key sectors in the portfolio include Engineering, Pharma, Telecom, Power, Petroleum, and Mining among others. Overall, the portfolio maintains a balanced allocation across cyclical, defensive, and sensitive sectors.

Is HDFC Large Cap Fund suitable for my investment goals and risk tolerance?

HDFC Large Cap Fund has established a remarkable long-term performance record. Although it may not shine during bear markets, the fund stands out during recovery and bull phases, proving its ability to reward investors handsomely over complete market cycles. By focusing on well-established businesses and market leaders, HDFC Large Cap Fund provides stability and steady growth to its portfolio as well as investors.

HDFC Large Cap 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.

HDFC Large Cap Fund is suitable for investors looking for a high-conviction-driven Large Cap Fund that focuses on well-established businesses with a longer investment horizon of at least five years.

Watch this video to explore the best performing Large Cap Funds that are worth monitoring in 2025:

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.

This article first appeared on PersonalFN here