Best Large Cap Mutual Funds to Invest in 2022 – Top Performing Large Cap Mutual Funds in India

Aug 20, 2022

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Large cap mutual funds invest in market leaders that have the ability to generate stable returns even amidst stock market chaos, like the one we witnessed in 2021. So, as a mutual fund investor, large cap mutual funds are a must in your portfolio.

But finding the best large cap mutual funds for 2022 is usually a challenging exercise for most investors because the large cap mutual fund category in India has around 30 large cap schemes and an Assets Under Management (AUM) of Rs 2,32,154 crore as of July 31, 2022.

With all these 30 large cap mutual funds investing in the same 100 companies, it is important for investors to invest in only the best large cap mutual funds in 2022 to truly make a difference in their portfolio.

So, which are the best large cap mutual funds to invest in 2022? That is precisely what we will be answering in this article.

We at PersonalFN have shortlisted the four best large cap mutual funds for 2022. But before we reveal our list of best Large Cap Funds for 2022, let us take a look at the basics of large cap mutual funds

What are Large Cap Mutual Funds?

The Securities and Exchange Board of India (SEBI) defines large cap mutual fund as 'an open-ended equity mutual fund investing a minimum 80% of its total assets in equity and equity related instruments of large cap companies'.

Large cap companies, also known as blue chip companies, are the top 100 companies in terms of market capitalisation. Large cap companies generally have a market capitalisation of more than Rs 20,000 crore. Some of the most popular large cap companies include Reliance Industries Ltd, Tata Consultancy Services Ltd, HDFC Bank Ltd, Infosys, HUL, etc.

So, a large cap mutual fund will use minimum 80% of its total assets to buy shares of such blue-chip market leaders. The fund manager has the freedom to invest the remaining 20% corpus in stocks of mid and small cap companies or debt instruments or simply hold the balance 20% in cash to take care of redemption pressures.

Examples of Large Cap Mutual Funds in India

AUM data as of July 31, 2022
(Source: ACE MF)
 

What are the advantages of investing in Large Cap Mutual Funds?

Large cap mutual funds invest in market leaders that have a market capitalisation of more than Rs 20,000 crore. This investment strategy helps a large cap fund manoeuvre through market phases and tide over volatility. Apart from being market leaders, blue chip stocks (or companies) have well-established brand recall value, economic moats, competitive pricing, ethical, and efficient management, governance and compliance practices, solid balance sheet, surplus cash reserves. And most importantly, they enjoy the customer loyalty that helps them tide over the tough times.

Top stock holdings of Large Cap Funds

Top stock holdings of Large Cap Funds
Data as of July 31, 2022
(Source: ACE MF)
 

Let us now take a look at the advantages of large cap mutual funds.

1) Stable returns amidst economic turmoil 

The market leaders that large cap mutual funds invest in are companies with strong brand value and enjoy customer loyalty, which is especially crucial during market downturns. For e.g.: During the pandemic, households across the country reduced their expenditure to only essential items, but they did not shift their consumer preferences from their regular brands such as Colgate and Pepsodent, although cheaper alternatives like Dantkanti and Meswak were available.

This is the power of brand recall and customer loyalty. So, blue chip companies like Nestle, Hindustan Unilever Ltd, among others managed to post decent revenue numbers while everything around them was crumbling. Hence, large cap mutual funds are ideal for investors as they invest in companies that are able to manage economic downturns on the back of a strong balance sheet and customer loyalty.

2) Regular dividend payments 

Generally, a company pays dividends from the excess profit that it generates. But since mid and small sized companies use their excess profits to reinvest in their own operations, mid and small cap mutual funds do not provide regular dividends. But this is not the case with large cap mutual funds.

Large cap companies have huge cash reserves, so even if they do not make profits in a particular year, they still have the bandwidth to pay dividends from their reserves and surpluses. So, large cap mutual funds are ideal for retirees or conservative investors looking to earn regular income from their portfolio.

Best Large Cap Mutual Funds to Invest in 2022 – Top Performing Large Cap Mutual Funds in India
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3) Helps in investing in top large cap stocks with just one fund 

For a moment, imagine that there are no large cap funds. Now what do you do if you want to invest in the top 100 companies listed on the exchange? You have no option but to buy individual stocks, which means your investment amount has to be in lakhs just to buy one share each of these 100 blue chip companies. But with large cap funds, you can invest in the best of these 100 companies with just Rs 100 via a systematic investment plan (SIP). Another big advantage of a large cap fund is that you have an expert fund manager who is responsible for picking the right large cap stocks with the aim to generate alpha for unitholders.

[Must Read:  Best Mutual Funds for SIP]

What are the risks involved in Large Cap Mutual Funds?

Since Large Cap Mutual Funds invest in equities, they are prone to market fluctuations. However, the risk is relatively lower compared to its peers in the Mid-cap Fund and Small-cap Fund category. Moreover, Large Cap Fund may not generate extraordinarily high returns because large-sized companies already hold significant market share and therefore, they grow at a slower pace.

Who should invest in Large Cap Mutual Funds?

Large Cap Mutual Funds are suitable for investors looking for steady growth of capital through equities but do not want to assume very high risk. It is advisable to have a long-term investment horizon of at least 3-5 years when investing in Large Cap Funds.

 

How much to invest in Large Cap Mutual Funds?

With significant exposure to market leaders, Large Cap Mutual Funds are less likely to be impacted by economic slowdown and market correction. Therefore, these funds should ideally form part of the Core equity portfolio of every investor. However, the actual allocation in the portfolio will depend on various factors such as your financial goals, risk appetite, and investment horizon.

Conservative investors and investors with moderate risk appetite should ideally have 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.

Avoid investing in Large Cap Funds if you have a very short-term investment horizon of, say, 6 months, 1 year, or 2 years.

How are Large Cap Mutual Funds taxed?

Large cap mutual funds are equity-oriented mutual funds and hence they follow equity taxation. The holding period for large cap mutual funds from a tax perspective is 12 months. So, if you sell your large cap fund units before 12 months, you pay short-term capital gains (STCG) tax of flat 15%.

On the other hand, if you sell your large cap fund units after completing one year, you pay a long-term capital gains tax of 10% with indexation, but only if your gains exceed Rs 1 Lakh in a financial year. If your long-term gains are below Rs 1 Lakh and you redeem after completing one year, then you do not have to pay any tax on these gains.

4 best Large Cap Mutual Funds to Invest in 2022

With the basics of large cap funds done, let us now move on to the list of the best large cap funds to invest in 2022. This list of best large cap funds for 2022 is a result of extreme scrutiny of each of the 33 large cap funds in India on both qualitative and quantitative factors. These four best large cap funds for 2022 have the calibre to generate consistently superior long-term returns whilst curbing the downside risks during market downturns.

These high quality schemes have been carefully shortlisted using our proprietary SMART Score Matrix that gives high weightage to both quantitative and qualitative parameters to identify true long term performers.

List of Best Large Cap Mutual Funds to Invest in 2022

Scheme Name Returns
Absolute (%) CAGR (%)
1 Year 2 Years 3 Years 5 Years 7 Years
Canara Robeco Bluechip Equity Fund 6.2 25.1 22.0 15.7 13.9
UTI Mastershare Fund 7.6 27.2 20.0 14.0 11.9
ICICI Pru Bluechip Fund 12.0 28.2 19.7 13.6 13.2
Mirae Asset Large Cap Fund 8.2 25.6 18.9 13.8 14.0
Past performance is not an indicator for future returns
Data as of August 18, 2022
(Source: ACE MF)
 

Let us take an in-depth look at each of these four best large cap mutual funds to invest in 2022.

Best Large Cap Mutual Fund to Invest in 2022 #1: Canara Robeco Bluechip Equity Fund

Launched over a decade back in August 2010, Canara Robeco Bluechip Equity Fund is a relatively small-sized scheme in the Large-cap Fund category. It has recorded superior growth over the last few years and has recently caught the attention of investors. Over the last 5-years, Canara Robeco Bluechip Equity Fund has registered a compounded annualised growth of around 15.7%, as against about 13.9% CAGR delivered by its benchmark S&P BSE 100 - TRI index. This outperformance has come at a far reasonable risk when compared to the benchmark and category average.

Top portfolio holdings of Canara Robeco Bluechip Equity Fund

Data as of July 31, 2022
(Source: ACE MF, PersonalFN Research)
 

Canara Robeco Bluechip Equity Fund usually holds a fairly-diversified portfolio of about 45 to 50 stocks. As of July 31, 2022, the fund held 43 stocks in its portfolio spread across sectors. Index heavyweights like ICICI Bank, HDFC Bank, Reliance Industries, Infosys, and SBI currently find a place in the top portfolio holdings. In terms of sector, Banking & Finance, Infotech, Consumption, Petroleum, and Auto form part of the fund's core holdings.

Performance across market phases of Canara Robeco Bluechip Equity Fund

Scheme Name Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase
09/Mar/09 To 05/Nov/10 05/Nov/10 To 20/Dec/11 20/Dec/11 To 03/Mar/15 03/Mar/15 To 25/Feb/16 25/Feb/16 To 14/Jan/20 14/Jan/20 To 23/Mar/20 23/Mar/20 To 18/Aug/22
Canara Rob Bluechip Equity Fund - -13.02 25.19 -20.59 18.90 -30.52 40.30
Category Average - Large Cap Fund 74.78 -22.98 27.39 -19.11 16.33 -34.71 40.70
S&P BSE 100 - TRI 83.58 -26.25 26.30 -21.53 17.29 -38.01 45.71
Past performance is not an indicator for future returns
Data as of August 18, 2022
(Source: ACE MF, PersonalFN Research)
 

During the market crash of 2020, Canara Robeco Bluechip Equity Fund managed to outperform the benchmark by a noticeable margin of 7.5 percentage points and the large-cap category average by over 4 percentage points. The fund has shown reasonable performance in the recent bull phase as well compared to its peers and has the potential to reward investors over the complete market cycle going forward.

Backed by a well-defined investment process, Canara Robeco Bluechip Equity Fund has the ability to timely pick quality names having high growth potential, and deliver market-beating returns in the long run.

Click here to read our detailed analysis on Canara Robeco Bluechip Equity Fund.

Best Large Cap Mutual Fund to Invest in 2022 #2: ICICI Prudential Bluechip Fund

Launched in May 2008, ICICI Prudential Bluechip Fund is one of the largest schemes in the Large Cap Fund category. The fund focuses on investing in the top 100 companies listed on the NSE in which the fund manager has high conviction. Over the past five years, the fund has appreciated at 13.6% CAGR, which is largely in line with the benchmark returns. ICICI Prudential Bluechip Fund has generated decent risk-adjusted returns for its investors, its Sharpe ratio is ahead of the benchmark and the category average.

Top portfolio holdings of ICICI Pru Bluechip Fund

Graph 2 Graph 2
Data as of July 31, 2022
(Source: ACE MF, PersonalFN Research)
 

As of July 31, 2022, ICICI Prudential Bluechip Fund held a large portfolio of 70 stocks, which includes 2 offshore equities. The fund held its major exposure in index heavyweights such as ICICI Bank, Reliance Industries, HDFC Bank, Infosys, and L&T. In terms of sector, ICICI Prudential Bluechip Fund's portfolio is skewed towards Banking and Finance along with significant exposure to Infotech, Petroleum, Auto & Auto Ancillaries, Engineering, Pharma, among others.

Performance across market phases of ICICI Pru Bluechip Fund

Scheme Name Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase
09/Mar/09 To 05/Nov/10 05/Nov/10 To 20/Dec/11 20/Dec/11 To 03/Mar/15 03/Mar/15 To 25/Feb/16 25/Feb/16 To 14/Jan/20 14/Jan/20 To 23/Mar/20 23/Mar/20 To 18/Aug/22
ICICI Pru Bluechip Fund 84.75 -17.91 27.36 -19.46 17.78 -37.29 44.96
Category Average - Large Cap Fund 74.78 -22.98 27.39 -19.11 16.33 -34.71 40.70
NIFTY 100 - TRI 80.44 -26.23 26.56 -20.58 17.35 -37.91 44.83
Past performance is not an indicator for future returns
Data as of August 18, 2022
(Source: ACE MF, PersonalFN Research)
 

ICICI Prudential Bluechip Fund has displayed its ability to limit the downside risk for its investors during uncertain and highly volatile market conditions, while it has also rewarded with above-average returns during market rallies.

ICICI Prudential Bluechip Fund has a proven track record of identifying fundamentally sound stocks in the large-cap space and has displayed its ability to generate above-average returns when compared to its peers.

Click here to read our detailed analysis on ICICI Pru Bluechip Fund.

Best Large Cap Mutual Fund to Invest in 2022 #3: Mirae Asset Large Cap Fund

Mirae Asset Large Cap Fund is one of the most popular schemes in the Large Cap Mutual Fund category. The prudent investment strategies followed by the fund have earned it a tag of being a consistent performer that has rewarded long-term investors well over the long run. Over the last 5 years, Mirae Asset Large Cap Fund has appreciated at a CAGR of around 13.8%, which is broadly in line with the returns delivered by the current benchmark Nifty 100 - TRI index. Its ability to deliver reasonable risk-adjusted returns, while limiting the downside risk differentiates the fund from the rest.

Top portfolio holdings of Mirae Asset Large Cap Fund

Graph 2 Graph 2
Data as of July 31, 2022
(Source: ACE MF, PersonalFN Research)
 

Mirae Asset Large Cap Fund invests in a well-diversified portfolio of about 50-65 stocks. As of July 31, 2022, the fund held 63 stocks in its portfolio. Its major exposure is in highly liquid large cap names like ICICI Bank, HDFC Bank, Infosys, Reliance Industries, and Axis Bank. In terms of sector, around 35.5% of the fund's portfolio is currently skewed towards Banking and Finance stocks, followed by Infotech, Petroleum, Consumption, and Pharma, among others.

Performance across market phases of Mirae Asset Large Cap Fund

Scheme Name Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase
09/Mar/09 To 05/Nov/10 05/Nov/10 To 20/Dec/11 20/Dec/11 To 03/Mar/15 03/Mar/15 To 25/Feb/16 25/Feb/16 To 14/Jan/20 14/Jan/20 To 23/Mar/20 23/Mar/20 To 18/Aug/22
Mirae Asset Large Cap Fund 104.76 -21.22 32.48 -17.40 20.37 -37.34 43.42
Category Average - Large Cap Fund 74.78 -22.98 27.39 -19.11 16.33 -34.71 40.70
NIFTY 100 - TRI 80.44 -26.23 26.56 -20.58 17.35 -37.91 44.83
Past performance is not an indicator for future returns
Data as of August 18, 2022
(Source: ACE MF, PersonalFN Research)
 

Mirae Asset Large Cap Fund has not only delivered superior returns during market rallies but has also performed well during depressed market conditions. In the recent bull phase, it stood among the top performers in the category, though it has slightly trailed the benchmark.

The fund is nimble in its approach and has a history of taking timely sector bets which helps it to tackle market volatility and offer stability to the portfolio.

 

Click here to read our detailed analysis on Mirae Asset Large Cap Fund.

Best Large Cap Mutual Fund to Invest in 2022 #4: UTI Mastershare Fund

Launched way back in October 1986, UTI Mastershare Fund is India's oldest equity mutual fund scheme. Categorised as a Large Cap Fund, UTI Mastershare Fund predominantly invests in leading businesses with larger market capitalisation available at reasonable valuations after considering the expected earnings growth. In the last five years, UTI Mastershare Fund grew at a CAGR of about 14% which is nearly in line with the returns generated by its benchmark S&P BSE 100 - TRI over the same time period. UTI Mastershare Fund also stands strong in terms of risk-adjusted returns, its Sharpe Ratio is higher than that of the category average as well as the benchmark.

Top portfolio holdings of UTI Mastershare fund

Graph 2 Graph 2
Data as of July 31, 2022
(Source: ACE MF, PersonalFN Research)
 

UTI Mastershare Fund usually holds a fairly large portfolio of around 45-50 stocks. As of July 31, 2022, the fund held as many as 50 stocks in its portfolio. ICICI Bank is currently the top holding having an allocation of 9.7%, followed by Infosys, HDFC Bank, Bharti Airtel, Reliance Industries, among others. In terms of sector, Financial services top the list while Infotech, Consumption, and Pharma are the other core holdings in the fund's portfolio.

Performance across market phases of UTI Mastershare Fund

Scheme Name Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase Bear Phase Bull Phase
09/Mar/09 To 05/Nov/10 05/Nov/10 To 20/Dec/11 20/Dec/11 To 03/Mar/15 03/Mar/15 To 25/Feb/16 25/Feb/16 To 14/Jan/20 14/Jan/20 To 23/Mar/20 23/Mar/20 To 18/Aug/22
UTI Mastershare Fund 66.66 -20.93 26.99 -20.64 15.62 -34.10 42.11
Category Average - Large Cap Fund 74.78 -22.98 27.39 -19.11 16.33 -34.71 40.70
S&P BSE 100 - TRI 83.58 -26.25 26.30 -21.53 17.29 -38.01 45.71
Past performance is not an indicator for future returns
Data as of August 18, 2022
(Source: ACE MF, PersonalFN Research)
 

While the fund has not been able to generate significant alpha over the benchmark during bull market phases, it has done well to contain the downside risks during bearish phases.

Overall, UMF has positioned itself as a reliable fund having a steady track record and is well capable of generating decent capital appreciation at lower risk.

Click here to read our detailed analysis on UTI Mastershare Fund.

This completes our list of the four best large cap mutual funds to invest in 2022. The only thing left to do now is to invest in these best large cap funds and reap the benefits of investing in market leaders.

If you wish to have super compressive and detailed research reports on the best large cap mutual funds for 2022 and other diversified equity mutual funds to invest in, subscribe to  PersonalFN's premium research service, FundSelect.

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At PersonalFN, we apply a host of qualitative and quantitative parameters using the S.M.A.R.T score matrix.

S - Systems and Processes

M - Market Cycle Performance

A - Asset Management Style

R - Risk-Reward Ratios

T - Performance Track Record

The stringent process has helped our valued mutual fund research subscribers to own some of the best mutual fund schemes in their investment portfolio with a commendable long-term performance track record. PersonalFN's service is apt if you are looking for insightful guidance and recommendations on some worthy funds having high growth potential in the years to come.

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Warm Regards,
Divya Grover
Research Analyst



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