Here’s the list of the best large cap mutual funds to invest in 2019 –
- Reliance Large Cap Fund
- Aditya Birla SL Frontline Equity
- HDFC Top 100 Fund
- SBI Bluechip Fund
- ICICI Prudential Bluechip Fund
Here are the parameter scores of the above funds according to Finpeg CRAFT Framework…
To understand the parameters in detail, please refer to Finpeg CRAFT Framework
You can refer to the following pointers to understand what each of these parameters mean in short…
- Long-term Percentile Rank
This is average percentile rank of the fund since Jan 2004 based on 3-year return. This is a measure of a fund’s performance with respect to its peers. Lower the rank, better the performance.
- Top25 Percentage
This is the percentage to capture the number of times the fund was in 25% since Jan 2004. This is a measure of consistency of performance of a fund. The higher the percentage, better the consistency.
- Downside Deviation
A variant of standard deviation. It only captures deviation below the average return. This captures the risk associated with the fund. Lower the deviation, lower is the risk.
- Near-term Percentile Rank
Average percentile rank of the fund in last 1 year based on 1-year return. This is a measure of a fund’s recent performance with respect to its peers. Lower the rank, better the performance.
- Average Return in 2008-09
Average 1-year return delivered by the fund during the crash of 2008-09. This captures the performance of the fund during times of stress.
Why Reliance Large Cap Fund is the best large cap mutual fund to invest in 2019
If pure score card is to go by, ICICI Prudential Large Cap Fund looks like the runaway winner here – best rank, most appearances in top large cap funds list and the lowest downside deviation among the funds listed. However, there are things that matter beyond the score card in the Finpeg CRAFT Framework.
If you knew what the parameters indicate, you would have been easily able to tell why Mirae Asset India Equity Fund is the best multicap fund to invest in 2019. But the large cap category is not as straightforward since the subjective parameters have much influence which is difficult to quantify. Let’s see now why Reliance Large Cap Fund takes the large cap fund category crown…
The biggest factor why Reliance Large Cap Fund beats ICICI Prudential Large Cap Fund and the other three is – Mr. Manish Gunwani.
Mr. Gunwani is the ex-fund manager of ICICI Prudential Large Cap Fund and the reason for its stellar performance. However, in 2017, Mr. Gunwani became the CIO of Reliance Mutual Fund. This instils our immense confidence in Reliance Large Cap Fund.
Aditya Birla Sun Life Frontline Equity Fund also looks like a better fund on paper than Reliance Large Cap Fund. However, the biggest concern regarding Aditya Birla Sun Life Frontline Equity Fund is the size of the fund – it is around Rs. 21,000 crore – almost twice that of Reliance Large Cap Fund. This makes Reliance Large Cap Fund edge past Aditya Birla Frontline Equity Fund in our rankings.
Finally, the near-term performance of Reliance Large Cap Fund is the best; slightly better than ICICI Prudential Large Cap Fund whose good performance after the fund manager change has continued but only in the near-term. To hand over the 1st rank to ICICI Prudential Large Cap Fund we need to keep a close watch on its future performance.
In short, Reliance Large Cap Fund is the best large cap fund to invest in 2019 because –
- CIO – Mr. Manish Gunwani
- Comfortable fund size of around Rs. 11,700 crore
- Stellar near-term performance
What are Large Cap Mutual Funds
As per the latest definition, large cap companies are the 100 largest publicly listed companies in the country. Similarly, the next 150, meaning the companies ranked from 101 to 250, in terms of full market capitalization are termed as mid cap companies. The all the other companies, ranked from 251 onward, are termed as small cap companies.
So the mutual funds which primarily invest the money they receive from investors in large cap companies are termed as large cap mutual funds.
Who should invest in Large Cap Mutual Funds
Large cap mutual funds is easily the safest category when it comes to pure equity mutual funds. The low standard deviation figures in the table at the end of this page are a testament to the robustness of large cap mutual funds.
This because large cap companies have a very limited upside and downside in terms of earnings and performance. These are mostly industry leaders and experience the minimum volatility or risk.
Large cap mutual funds, like multicap mutual funds, is a great option for new investors, especially the conservative ones.
If equity mutual funds, or equity in general, scares you, large cap mutual funds is the best starting point for you to develop comfort with equity investing.
What are the expected returns of Large Cap Mutual Funds
For the best multi cap mutual funds according to Finpeg, the following are the 3-year and 5-year rolling return and standard deviation.
Note – NAV considered is of regular and growth options of the funds and for the period 1st Jan 2010 to 31st Dec 2018
So, you can expect a return in the range of 14-16% provided that you select the best large cap mutual funds to invest and stay invested for 3-5 years.
To know what are the best mutual funds in other categories like small cap, visit this page.