The large cap mutual funds are less risky than the midcap and small cap funds. These funds are suitable to the person who do not want to take a higher risk. This post lists the top 10 best large cap mutual funds for the year 2017. I have chosen these funds not only on the basis of past performance, but several other factors such as risk, volatility and portfolio were considered to find out the best large cap mutual funds for 2017.
Mutual funds are a type of investment which collects money from many people. The accumulated money is invested in the share market or debt market. A professional fund manager manages the investment of this accumulated corpus. A research team helps the fund manager in the selection of best shares. The mutual fund company takes some fees for this service. This charge ranges from 1-3%.
Because of the mutual funds, A common investor can take services of the professional fund manager. Also, because of the mutual fund a small investor can enjoy the benefit of diversification without putting a large amount.
What is A Large Cap Mutual fund
A mutual fund scheme invests in a defined pattern. Some schemes invest only in the share market while others invest in the debt market. Some invest in both, shares and debt. Among shares also, some scheme invests only in the large companies. Those mutual funds which invest only in the large companies are called as the Large cap mutual fund.
The large companies are considered stronger because of their size. These companies don’t swing much during a downturn or rally. Thus, Large cap companies fall less when it is slide and also jumps less when it is a rally. Because of this quality of large companies, the mutual funds which invest into them are also considered as the stronger.
What are the Qualities of best fund
We are different people and have different requirements. Some of us want a mutual fund which gives outstanding return what if it takes a higher risk. On the other hand some of us are cautious and satisfied with lesser return. Some of us want to invest in a mutual fund for a short duration while others want to invest for a long term.
The people who have chosen the large cap fund do not want the excessive risk. These investor can settle for lesser return to avoid the shock. Also, these investor should be prepared for a long term. So, these investor want following qualities from the large cap funds.
- It should give better return than the share market.
- It should fall less when there is a slide in the market.
- The return of the fund should not go through the roller coaster ride. Rather it should show the resilience.
- The large cap fund and ts management should have a good reputation in the mutual fund market.
How Do I rank the top funds
To choose the best large cap mutual fund, I have gone through the following basic filters. These filters were used to pick the best large cap mutual funds which would suit your requirements. I have only taken the ‘regular ‘ version of every mutual fund scheme as Direct mutual funds are launched since 2013. But, I recommend to invest in ‘direct’ version of the chosen mutual fund scheme as It gives higher return than the regular fund. Every mutual fund scheme has the ‘regular’ and ‘direct’ version.
This is the first and most important factor. We invest in a mutual fund to get a better return. Otherwise, the bank deposit is also a good option without any risk. Thus, a mutual funds scheme must give a return better than the bank deposits and post office saving schemes.
As, we can’t know the future returns of a mutual fund scheme, we have to rely on the past performance to get an idea about the future.
To pick the top performing mutual fund I have gone through the return of every fund in the last 3, 5 and 10 year. I have deliberately skipped the 1-year return as this is very short period to judge an equity mutual fund scheme. I have considered only those funds which have given above average return in the last 3, 5 and 10 years.
This is another important factor to judge a mutual fund scheme. As we don’t have a guarantee about the future performance of a scheme, there is inherent risk with the mutual fund. Even mutual fund companies gives disclaimer that past performance is no guarantee of future return therefore we have to study the nature of the mutual fund schemes. A fund which takes excessive risk can also go down swiftly. The good performance in the past can turn into a worst performance in the future.
That is why, It is necessary to know the risky behaviour of a mutual fund scheme. This risky behaviour is judged on the basis of stock selection and portfolio churning. To make things simple, the mutual fund research companies assigned Risk grade to every equity mutual fund scheme. This is done automatically on the basis of past data.
So, to get the best large cap mutual fund I have excluded those schemes which take above average risk.
How Old is Fund Manager
As we are assessing the large cap mutual funds on the basis of past performance, the role of the fund manager becomes very important. As the past performance of a fund was the hard work of a fund manager, the change in fund manager can also alter the performance of the fund. Therefore, to continue the good run, it is necessary that old fund manager continues. Hence, I have considered only those funds where lead fund manager would have handled the fund at least for 3 years.
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Top 10 best large cap mutual funds
After the assessment on the basis of selected parameters, I have these top 10 best large cap mutual funds. These fund are arranged in the alphabetical order.
- Birla Sun Life Frontline Equity Fund Growth
- Birla Sun Life Top 100 Fund Growth
- Franklin India Bluechip Fund Growth
- Franklin India Prima Plus Fund Growth
- ICICI Prudential Dynamic Growth
- ICICI Prudential Top 100 Fund Growth
- L&T Equity Fund Growth
- SBI Bluechip Fund Regular Growth
- UTI CCP Advantage Growth
- UTI Equity Fund Growth
Top 3 best large cap mutual fund
The top 10 list of best large cap fund is exhaustive and can be confusing to those who want to invest in one or two large cap mutual funds. To make this easy, I have further tightened the criteria. I have further shortlisted the top 5 large cap funds which have shown less volatility. Among these five, I am giving you the top 3 large cap mutual funds which have given highest return during last 3 years. These are in the order of their return.
|Top Large cap Funds||Average Return Per Year (%)|
|3-year||5 year||10 year|
|1||Franklin India Prima Plus||20.68||18.94||13.28|
|2||SBI Bluechip Fund||19.22||19.89||10.12|
|3||ICICI Prudential Dynamic||15.99||18.03||12.59|
Franklin India Prima Plus
You may have not heard more about this fund. But, you would be surprised that this fund has given best return in the last 10 years. The parent company of this fund, Franklin Templeton, is the renowned mutual fund company of the world. The Franklin Templeton emphasize on thorough research and value buying. That is why this fund performs good in longer duration.
- The fund does not focus on short term gains. It does not rush to accumulate as much corpus as it can. Rather, sometimes, it opts to underperform during the market rally.
- You can see the real strength of this fund during the downturn. In the 2008 and 2011 when the market crashed, this fund was far better off than the category average.
- In the last 5 year period this fund has given about 19% annualized return.
- The fund manager Anand Radhakrishnan is the veteran of Franklin India. He is managing this mutual fund since 2007.
- The fund always search for the quality company which can give return in the long term.
- Franklin India Prima Plus invests into the companies with clean balance sheets, strong business models, sustainable competitive strengths, and high corporate governance standards.
Yearly Return of the Franklin India Prima plus Vs Large cap fund Category
|Franklin Prima Plus||Category (Large-Cap)||+/- of Large cap category|
SBI Bluechip Fund
SBI Bluechip Fund is one of the oldest mutual fund in India. The fund has gone some challenging phase in the past. However, It has been a better performer during last 5 years.
- It is a consistent performer and most of the time the return of the fund was better than the category average
- Since last 5 years, It has been far ahead of the category average.
- The fund has a experienced research team
- The fund manager Sohini Andani is an experienced portfolio manager and an astute stock-picker. She is managing this fund since 2010.
- This fund also invest about 10% of the corpus into the mid cap companies.
- The fund’s expense ratio is higher than the other funds of the large cap category
|SBI Bluechip||Category (Large-Cap)||+/- category|
ICICI Prudential Dynamic
This mutual fund scheme is one of the best scheme from the ICICI Prudential. This fund can buy share from any category however it sticks to the large cap. The fund is open to invest in fixed deposits or sitting on cash.
- The fund was launched in November 2002
- The fund is managed by the Sankaran Naren Since 2012. Earlier also, Sankaran managed this fund from 2006 to 2011. He had taken a break for one year.
- ICICI Prudential Dynamic invests primarily in shares but it can also invests some part in debt to deal with the market slide.
- In the last 10 years, this fund has beaten category average 7 times.
- In the last 5 year ICICI Pru Dynamic has given about 18% average annual return.
|ICICI Pru Dynamic||Category (Large-Cap)||+/- category|
In this post I have picked the top 10 and top 3 best large cap mutual fund for 2017. I have also told you the methodology of the fund selection. I have tried to keep the things simple. I don’t went into the different types of ratio i. e. Sharpe, Sortino, treynor or Jensen ratio . As, for a person from non-finance background, It becomes very difficult to understand these ratio. I believe that basic parameters are enough to find out the best mutual funds. However, I recommend to take the advice of the certified financial analyst before taking any decision. If tax saving is also one of your purpose, you should also consider investing into best ELSS fund. These mutual fund gives you tax benefit as well. I have also made a list of top mid cap funds and top flexicap mutual funds. You can also check them out.
(Data is taken from Morningstar.in on 20 Dec 2016)