Large-Cap Funds Outperform with Consistent Returns Despite Market Volatility

Large-cap mutual funds are gradually becoming a desired investment product, with a five-year return exceeding 22 percent. The assets under management (AUM) of a number of mutual fund houses are now above Rs 50,000 crore. Nippon India Large Cap has now joined the list. Earlier, ICICI Prudential and SBI funds also crossed the landmark of Rs 50,000 crore in AUM.

This has been accomplished, despite lower investment in equity funds, mainly because of profit-booking following the recent market rally and meeting the increased liquidity demand during the festive season. Large-cap funds are a safe investment choice for newcomers as well as risk-averse investors because of the investment portfolios of such funds. Large-cap funds mainly invest in blue-chip stocks, which are said to have a robust business model, along with investing in the respective sectors.

Large-cap funds have performed exceptionally well over the years. Nippon India Large Cap delivered returns of 18.46% and 22.43% over 3 and 5 years, respectively. Invesco India Large Cap delivered returns of 16.68% and 17.67%, respectively. The primary reason for Nippon Large Cap Fund's success is that it follows a strategy of investing rather than indexing, where the fund manager attempts to outperform the benchmark index.

According to experts, large-cap funds provide a relatively safe haven during periods of market volatility. These funds maintain a balance between stability and continuity by investing in established companies with strong balance sheets. For this reason, large-cap mutual funds are becoming a preferred vehicle for investors seeking long-term capital creation.