Best large Cap Mutual Funds To Invest In 2022

Retail investors are in love with large cap mutual funds. And why shouldn’t they be. Large cap mutual funds are a perfect blend of low-risk high-return type of investment. With large cap mutual funds, investors can earn substantially higher returns than a bank fixed deposit. That too, without taking very high risk. And large cap mutual funds seem to have rewarded investors equally. In the last one-year, large cap mutual funds have generated an average return of 17.67% (as of February 15, 2022).

The average net asset under management (AUM) of large cap mutual funds is a mammoth Rs 2.18 Lakh crore (as of December 31, 2021). This is the second-highest AUM in the entire equity mutual fund segment. But unfortunately, it also means that the large cap mutual fund category is over-crowded. There are nearly 32 large cap mutual funds in India. And all of them are more or less investing in the same set of companies. This is why selecting the best large cap mutual fund is a difficult but important task.

But don’t you worry. RankMF to the rescue. You see, the experts at RankMF have curated a list of the five best large cap mutual funds in 2022. One of our recommended best large cap mutual fund has generated an alpha of 3.85%. Now this is a big number considering, the universe of large cap stocks is limited. Despite this, the fund has managed to outperform its benchmark by 3.85%.

Which is this best large cap mutual fund? And what about the other four best large cap mutual funds? Well, hold your peace as we delve deeper into the world of large cap mutual funds. Let us begin by understanding what is a large cap mutual fund.

In this article we cover

• 1) Large Cap Mutual Fund – Definition and Meaning

  2) 5 Best Large Cap Mutual Funds in 2022

  3) 5 Reasons Why Tata Large Cap Fund is the Best Large Cap Fund in 2022

  4) 5 Reasons why UTI Mastershare Unit Scheme is the best large cap mutual fund in 2022

  5) 5 Reasons that make Kotak Bluechip Fund the best large cap mutual fund in 2022

  6) 5 Reasons that make Axis Bluechip Fund the best large cap mutual fund in 2022

  7) 5 Reasons Why BNP Paribas is one of the best large cap mutual fund in 2022

Large Cap Mutual Fund – Definition and Meaning

The Securities and Exchange Board of India (SEBI) defines large cap funds as – An open-ended equity scheme investing a minimum of 80% of its total assets in stocks of large cap companies.

In simple terms, large cap mutual funds invest in stocks or preference shares of large cap companies. What are large cap companies? They are the top 100 companies listed on the stock exchanges as per market capitalisation. So, think of the bluest of the blue-chip companies like Reliance Industries Ltd, Tata Consultancy Ltd, and HDFC Bank Ltd etc.

In essence, large cap mutual funds invest in market leaders. These are companies which have a strong brand value and an even stronger balance sheet. This is highly advantageous during economic downturns as these companies have the cash reserves and management skills to tide through the difficult times.

The table below shows the top holdings of Axis Blue Chip Fund, one of the best large cap mutual funds in 2022.

Infosys Ltd is a market leader in Information and Technology sector (IT). Bajaj Finance is a front runner in the financial services space. And the list goes on. Basically, large cap mutual funds invest in market leaders. This helps them create sustainable and consistent growth in the long-term. But this isn’t the only advantage of investing in large cap mutual funds. Join me, as we explore the advantages of large cap mutual funds.

Advantages of Large Cap Mutual Funds

1. Stable and sustainable growth :

   Large cap stocks aren’t one-hit wonders. You will not see them delivering a return of 50% or 100% in one year and nothing in the next. Instead, large cap stocks are reliable and consistent performers. They have a history of delivering stable returns consistently. Even during economic downturns, large cap stocks are far less affected than mid and small cap stocks. The graph below shows the performance of large cap mutual funds over the long-term.



Note: *Returns as on 4th February 2022

2. Dividend as a secondary source of income :

   A big advantage of a large cap mutual fund is its ability to generate dividends. What is a dividend? Think of it as an additional cash gift given by a stock. In most cases, dividends are paid from a company’s profits. However, it is not compulsory for companies to give out dividends.

   But most large cap companies pay dividend to reward investors for their loyalty. This is a double whammy for investors in large cap mutual funds. They get to enjoy both stable capital appreciation and dividends as a bonus. The graph below shows the consistent dividends paid by Franklin India Bluechip Fund in the last five years.

   
   Now suppose I invested Rs 10,000 in Franklin India Bluechip Fund on January 1, 2017. My purchase NAV was Rs 39.0840. I have received 255.85 units. The NAV of the fund as on February 4, 2022 is Rs 43.7555. So, my first income from the fund is the capital appreciation in the value of my investment from Rs 10,000 to Rs 11,194. But wait there’s more. I have also received the following dividends from the fund –

   Year	Dividend Income
   2018	1,535
   2019	1,407
   2020	1,279
   2021	1,279

   Consistent dividend is one of the main reasons why investors like large cap mutual funds. They make an excellent source of additional income.

3. Protection against market downturns :

   Can you imagine a world where banks did not exist? Will you stop consuming essentials like biscuits, tea, oil? I bet not. This is why bluechip stocks are always in demand. Since they are more or less selling necessities, they earn consistent cashflows. This helps them create reserves and surplus to tide through economic downturns. Hence, large cap stocks do well during economic downturns in comparison to mid and small cap stocks.

   The graph below shows the performance of Canara Robeco Bluechip Equity Fund and Kotak Emerging Equity Opportunities Fund across various bear market cycles.

   

   Midcap mutual funds handled the bear market of 2015-16 well. But historically, large cap mutual funds have performed better during bear markets. For example, consider the bear market between November 5, 2010 and December 20, 2011.

   • Canara Robeco Bluechip Equity Fund was down by (-) 13%.
   • While Kotak Emerging Equity Opportunities Fund fell by a huge 31%!
   
   

   This is why you must include large cap mutual funds in your portfolio to help you tide over market uncertainties.

4. Highly Liquid :

   Large cap stocks are market leaders and hence they are always in demand. This makes them highly liquid. So, the fund manager is able to enter and exit from stocks easily without worrying about market liquidity. This is not the case with mid cap stocks and mutual funds. For example –

   • Axis Midcap Fund invests 1.96% of its corpus in stocks of JK Cement Ltd.
   • Axis Bluechip Fund invests 3.01% of its assets in stocks of Ultratech Cement Ltd.
   

   Note: *Data as on 7th February 2022

   Just look the difference in the daily trading volume of these two stocks. Which fund manager do you think will have more freedom to buy and sell stocks? The answer is simple… Axis Bluechip Fund, a large cap fund. This ease of entry and exit also helps fund managers take up market opportunities easily.

   There is no doubt that large cap mutual funds are great for conservative investors. But they do have one crucial disadvantage. The universe of large cap funds is limited to the top 100 stocks as per market capitalisation. This means that every large cap fund manager in India has the same set of stocks to choose from. So, outperforming the benchmark or creating alpha becomes difficult for fund managers.

   But don’t you worry. RankMF’s list of best large cap mutual fund includes funds that have created alpha for its investors. Curious to know which are these best large cap mutual funds? Here’s the list of the five best large cap mutual funds in 2022.

   Best Large Cap Mutual Funds in 2022	1 Year	3 Year	5 Year	7 Year	10 Year	Expense Ratio
   Tata Large Cap Fund	27.23	18.47	14.07	10.68	14.00	2.40%
   UTI Mastershare Unit Scheme	25.28	19.86	15.90	11.40	14.63	2.00%
   Kotak Bluechip Fund	23.97	20.26	15.26	11.62	14.70	2.11%
   Axis Bluechip Fund	23.53	18.98	16.36	12.10	14.65	1.69%
   BNP Paribas Large Cap Fund	20.32	19.83	15.56	11.10	15.58	2.17%

   Note: *This is not investment advice.
   

   Let us look at what makes each of these five best large cap funds truly outstanding and unique. We will begin with Tata Large Cap Fund.

5 Best Large Cap Mutual Funds in 2022

• Tata Large Cap Mutual Fund:

  This best large cap mutual fund is a market veteran. But it is yet to receive love from investors. The fund comes with a paltry AUM of Rs 1,116 crore (as of December 31, 2021). Despite this, the fund has generated a return of 27.23% in the last one-year. The graph below shows the performance of the fund against its benchmark, S&P BSE 100 TRI.

  

  The fund has managed to beat its benchmark with a return of 27.23% against a benchmark return of 23.53%. From a portfolio angle, the fund invests 97.50% in equity, 1.80% in cash and 0.70% in debt instruments.

  The fund holds a compact portfolio of 46 stocks in the following proportions –

  • 86% exposure to large cap
  • 12.87% to midcap
  • 1.13% to small cap stocks.
  
  

  One of the reasons for Tata Large Cap Fund’s outperformance is its bullish outlook on financial stocks like ICICI Bank, HDFC Bank, State Bank of India, Axis Bank etc. The fund is also bullish on technology, energy and construction sector.

  

  Note: *Portfolio as of 31st December 2021

  Here are the top 10 stocks that Tata Large Cap Fund invests in as on December 31, 2021.

  Company	% Assets
  ICICI Bank	8.89
  Infosys	7.61
  HDFC Bank	6.67
  Reliance Industries	6.41
  State Bank of India	5.57
  Tata Consultancy Services	4.19
  Axis Bank	3.59
  Larsen & Toubro	3.38
  Bharti Airtel	3.37
  Wipro	2.56

  Note: *Portfolio as of 31st December 2021

  5 Reasons Why Tata Large Cap Fund is the Best Large Cap Fund in 2022

  • High and consistent dividend is a sign of a good large cap fund. Tata Large Cap Fund has been declaring high dividends consistently since its inception in 1998-99.

  • The fund has generated the highest return of 27.23% in the large cap category in the last one year.

  • The fund’s expense ratio is only 2.40%. This is 72% lower than other large cap mutual funds.

  • The fund’s turnover ratio is 29.73%. This is 50% lower than its large cap peers. A low turnover ratio is a good sign as it signifies the fund manager’s conviction in his stock picking.

  • The fund has a moderate margin of safety, which means it is a good time to start or continue your SIP in the fund

  Here are the key details of Tata Large Cap Fund –

  Launch Date	7th May 1998
  Return since Inception	19.93%
  Assets	Rs 1,116 crore
  Expense Ratio	2.40%
  Turnover	29.73%
  Dividend	Rs 4/unit
  Sharpe	0.68%
  Exit Load	For units in excess of 12% of the investment,1% will be charged for redemption within 365 days

  
  

• UTI Mastershare Fund:

  This is one of the very first large cap mutual funds in India. It was launched way back in October 1986. It has generated a return of 17.71% since inception. The fund has a decent AUM of Rs 9,703 crore, which provides it the much-needed stability. The fund has generated a return of 25.28% in the last one year, which is the second highest in the large cap fund category. The fund has managed to outperform its benchmark S&P BSE 100 TRI and the category average.

  

  Note: *Performance as on 7th February 2022

  The fund carries high risk and is bullish on the midcap segment, unlike other conservative large cap funds. The fund invests its Rs 9,703 crore corpus as follows –

  • 87.66% in large cap stocks
  • 11.77% in midcap stocks
  • 0.57% in small cap stocks
  
  

  Apart from the usual financial and technology sector, UTI Mastershare Fund is bullish on healthcare (8%), automobile (8%) and service stocks (7%).

  

  Note: *Portfolio as of 31st December 2021

  The fund has benefited greatly from the last one- year rally in stocks like Reliance Industries (4.20%), Larsen & Toubro (2.50%) among others.

  Company	% Assets
  Infosys	9.58
  ICICI Bank	7.81
  HDFC Bank	6.27
  Bharti Airtel	4.57
  Tata Consultancy Services	4.26
  Reliance Industries	4.20
  HDFC	4.05
  Tech Mahindra	2.66
  Larsen & Toubro	2.50
  Hindustan Unilever	2.41

  Note: *Portfolio as of 31st December 2021

  5 Reasons why UTI Mastershare Unit Scheme is the best large cap mutual fund in 2022

  • The fund has been paying regular dividends since its inception in 1986-87. In fact, it has increased its dividend from Rs 1.16 per unit in 2020 to Rs 2.70 per unit in 2021.

  • The fund has managed to create an alpha of 2.09%, which is a big deal in the case of large cap funds.

  • The fund’s AUM of Rs 9,703 crore is 39% higher than the average of large cap peers. This puts the fund in great position to offset redemption pressure.

  • The fund’s expense ratio is 2%. This is 58% lower than the large cap category average.

  • The fund’s turnover ratio is 32%. This is again 46% lower than other large cap mutual funds.

  Here are the basic details of UTI Mastershare Fund –

  Launch Date	18th October 1986
  Return since Inception	17.81%
  Assets	Rs 9,703 Crore
  Expense Ratio	2.00%
  Turnover	32.00%
  Dividend	Rs 2.70 per unit
  Sharpe	0.81%
  Alpha	2.09%
  Exit Load	For units in excess of 10% of the investment,1% will be charged for redemption within 365 days

  
  

• Kotak Bluechip Fund :

  This best large cap mutual fund is another one of those hidden gems. It was launched on December 29, 1998 and has generated a return of 18.44% since inception. The fund has given a return of 23.97% in the last one year. It also has the best return of 20.26% among large cap funds in a three-year period.

  

  Note: *Performance as on 7th February 2022

  While a large cap fund, Kotak Bluechip Fund does have an above average exposure to midcap category. The fund invests 84.17% in large cap, 14.57% in midcap and 1.26% in small cap stocks. The fund is also bullish on financial (29%), energy (10%) and construction sector (8%).

  

  Note: *Portfolio as of 31st December 2021

  Kotak Bluechip Fund is heavily bullish on Reliance Industries with a 7.55% asset weightage, which has helped it post superior returns in the last one year. It also has typical technology stocks like TCS, Infosys and Persistent Systems Ltd.

  Company	% Assets
  Reliance Industries	7.55
  Infosys	7.37
  ICICI Bank	7.04
  HDFC Bank	6.79
  Tata Consultancy Services	4.25
  Larsen & Toubro	3.37
  Axis Bank	3.07
  Persistent Systems	2.95
  HDFC	2.9
  Kotak Mahindra Bank	2.71

  Note: *Portfolio as of 31st December 2021

  5 Reasons that make Kotak Bluechip Fund the best large cap mutual fund in 2022

  • The fund has paid consistent annual dividends. It paid a dividend of Rs 1.52 per unit in 2020. So, investors can earn from both dividend income and capital appreciation.

  • The fund has generated an alpha of 1.76% over its benchmark. This was while maintaining a low expense ratio.

  • Kotak Bluechip Fund’s expense ratio is 2.11%. This is 63% lower than other large cap funds.

  • The fund also has one of the lowest turnover ratios of 14.41% in large cap category. This is 76% lower than its large cap peers.

  • The fund has a moderate margin of safety and is adequately priced. So, investors can start SIP in the fund.

  Launch Date	29th December 1998
  Return since Inception	18.60%
  Assets	Rs 3,652 crores
  Expense Ratio	2.11%
  Turnover	14.41%
  Dividend	Rs 1.52 per unit
  Sharpe	0.79%
  Alpha	0.76%
  Exit Load	For units in excess of 10% of the investment,1% will be charged for redemption within 365 days

  
  

• Axis Bluechip Fund:

  This was an easy one. No list of best large cap fund would be complete without mentioning Axis Bluechip Fund. It is one of the most loved and popular large cap funds in India with a massive AUM of Rs 34,584 crore. The fund has generated a return of 23.53% return in the last one year.

  

  Note: *Performance as on 7th February 2022

  Axis Bluechip Fund is a conservative large cap fund. This is evident from the fund’s composition. It invests 91.90% in equities and holds 8.10% in debt instruments. This is much higher than other large cap mutual funds.

  Among equities, the fund invests 99.58% in large cap stocks and only 0.69% in midcap stocks. So, Axis Bluechip Fund is apt for conservative investors. The fund has benefitted from the rally in service sector stocks like Avenue Supermarts where the fund invests 7.93% of its assets. Apart from service sector, the fund is bullish on financial (36%) and technology sector (20%).

  

  Note: *Portfolio as of 31st December 2021

  The fund’s top 10 stock holding includes –

  Company	% Assets
  Infosys	9.99
  Bajaj Finance	8.89
  ICICI Bank	8.55
  Avenue Supermarts	7.93
  Tata Consultancy Service	7.41
  HDFC Bank	7.34
  Reliance Industries	3.97
  HDFC	3.69
  Kotak Mahindra bank	3.58
  Divi's laboratories	3.04

  Note: *Portfolio as of 31st December 2021

  5 Reasons that make Axis Bluechip Fund the best large cap mutual fund in 2022

  • The fund has increased its dividend from Rs 1.32 per unit in 2020 to Rs 1.55 per unit in 2021.

  • The fund has generated an alpha of 4.12%, which is the highest in the large cap category.

  • The fund is well placed to fend off redemption pressures with a massive AUM of Rs 34,583 crore.

  • The fund has an expense ratio of 1.69%. This is 43% lower than large cap category average.

  • The fund’s turnover ratio is 49%, which is 43% lower than category average.

  Here are the basic details of Axis Bluechip Fund –

  Launch Date	5th January 2010
  Return since Inception	13.49%
  Assets	Rs 34,583 crore
  Expense Ratio	1.69%
  Turnover	49.00%
  Dividend	Rs 1.55 per unit
  Sharpe	0.91%
  Alpha	4.12%
  Exit Load	For units in excess of 10% of the investment,1% will be charged for redemption within 365 days

  
  

• BNP Paribas Large Cap Fund

  This large cap fund is another one of those hidden gems which has given stellar performance in the last one year. The fund was launched in September 2004 and has generated a return of 16.32% since inception. The fund comes with a small AUM of Rs 1,245 crore but that hasn’t affected its performance. In fact, the fund has managed to generate an alpha of 2.49% over its benchmark.

  The fund is also a conservative large cap fund as it invests 91.49% in large cap, 5.67% in midcap and 2.84% in small cap stocks. The fund is excessively overweight on financial sector with 37% allocation against a benchmark allocation of 27%. Its top 5 sector allocations also include technology (15%), energy (7%), construction (6%) and service (5%).

  

  Note: *Portfolio as of 31st December 2021

  The fund’s top 10 holdings include –

  Company	% Assets
  ICICI Bank	9.63
  HDFC Bank	8.02
  Infosys	7.12
  Reliance Industries	5.96
  HDFC	4.36
  Tata Consultancy Service	4.35
  Axis Bank	4.29
  Larsen & Toubro	3.65
  Kotak Mahindra bank	3.46
  Bajaj Finance	3.09

  Note: *Portfolio as of 31st December 2021

  5 Reasons Why BNP Paribas is one of the best large cap mutual fund in 2022

  • The fund has paid consistent dividends since its inception in 2004-05.

  • The fund has generated an alpha of 2.49%, which is one of the best in the large cap category.

  • The funds expense ratio is 2.17%. This is 65% lower than the average of the large cap category.

  • The fund’s turnover ratio is also 39%. This is 35% lower than other large cap funds.

  • The fund has a moderate margin of safety and this is a great time to start SIP or lumpsum in the fund.

This concludes our discussion on the best large cap mutual funds in 2022. Large cap mutual funds are ideal for conservative investors who are looking to earn better returns than bank fixed deposits while taking medium risk. Wondering how to start investing in the best large cap mutual funds? Simply open an investment account with RankMF and start investing in the best large cap mutual funds with just a few clicks.

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