Best Large Cap Funds: HDFC Large Cap Fund vs Aditya Birla Sun Life Frontline Equity Fund

Against this backdrop, it is prudent to allocate a dominant portion of your core investment portfolio to high-quality Large Cap Funds. While Mid Cap and Small Cap Funds attract considerable investor enthusiasm due to their higher growth potential compared to large caps, they remain more vulnerable to market fluctuations, often experiencing sharper price swings that increase the risk of loss.

Some Mid Cap Funds and Small Cap Funds have delivered impressive returns until now, despite bouts of volatility and correction. However, past performance does not necessarily guarantee similar outcomes in the future.

Large Cap Funds expose you to financially sound and well-established companies with solid fundamentals. They tend to offer relatively stable returns and consistent growth over the long term, with lesser risk compared to midcaps and small caps.

Overall, the Nifty 100 Index has exhibited a significant upward trend during the past decade, with several notable milestones. The index started at around 5,934 in January 2014 and has experienced substantial growth, reaching 23,587 by January 2025. This reflects the strong performance of large-cap companies in India during this period.

The graph also reveals periods of volatility and corrections, which are common in stock markets. For instance, there was a noticeable dip around January 2020, likely influenced by the global COVID-19 pandemic. However, the index has shown resilience, recovering and continuing its upward trajectory. The Nifty 100 Index serves as a crucial indicator of the overall health and performance of the blue-chip companies in Indian stock market.

[Read: 3 Best Large Cap Funds for 2025 - Top Performing Bluechip Mutual Funds in India]

You, as an investor, can benefit from experienced fund managers making well-informed investment decisions on your behalf. Additionally, Large Cap Funds offer high liquidity, making it easier for investors to exit if needed.

Selecting the right Large Cap Fund requires a careful analysis of the scheme's investment approach, risk profile, and alignment with your financial goals.

In this article, we will compare HDFC Large Cap Fund and Aditya Birla Sun Life Frontline Equity Fund across key parameters to help you decide which fund is most suitable for your needs.

# - HDFC Large Cap Fund

HDFC Large Cap Fund is an open-ended scheme that belongs to HDFC Mutual Fund. It is a well-established large-cap mutual fund launched in December 2012 and currently has an AUM of Rs 35,974.91 crores (as of Dec 31, 2024).

The scheme aims to provide long-term capital appreciation/income by investing predominantly in Large-Cap companies. The Scheme is benchmarked against BSE SENSEX - TRI as a primary index.

# - Aditya Birla Sun Life Frontline Equity Fund

Aditya Birla Sun Life Frontline Equity Fund is an open-ended scheme that belongs to Aditya Birla Sun Life Mutual Fund. It is a well-established multi-asset allocation fund launched in January 2013 and currently has an AUM of Rs 28,786.04 crores (as of Dec 31, 2024).

The scheme aims for long-term capital growth through a portfolio with a target allocation of 100% equity by aiming at being as diversified across various industries and/or sectors. The secondary objective of the fund is income generation and distribution of dividend. The Scheme is benchmarked against BSE SENSEX - TRI as a primary index.

Investment Style and Philosophy:

HDFC Large Cap Fund seeks to invest in businesses that are of higher quality, competitive, and sustainable, by primarily restricting the equity portfolio to large cap stocks.

The fund maintains a minimum 80% exposure to large cap stocks, which are the 1st to 100th companies in terms of full market capitalisation, as defined by SEBI from time to time. HDFC Large Cap Fund is by design well-diversified to reduce risk while maintaining stable growth.

Aditya Birla Sun Life Frontline Equity Fund allocates at least 80%-100% of the net assets to equity and equity-related instruments of large cap companies. The investments are diversified across various sectors and stocks to avoid overexposure to a single sector or stock.

To capitalise on opportunities as they arise, the scheme also retains the flexibility to invest in equity and equity-related instruments in companies other than large caps (to the extent of 20% of net assets). Up to 20% of the net assets may also be invested in debt and money market securities and money market instruments (including securitised debt).

• Performance Comparison: Rolling Returns

  Scheme Name	Absolute (%)	CAGR (%)
  	1 Year	3 Years	5 Years	7 Years	10 Years
  HDFC Large Cap Fund	32.58	20.34	18.19	15.06	14.60
  Aditya Birla Sun Life Frontline Equity Fund	30.89	16.81	17.93	14.11	14.75
  Large Cap - Category Average	32.53	16.61	17.93	14.76	14.69
  Benchmark - Nifty 100 TRI	29.73	15.45	17.21	14.77	14.00

  Data as of January 22, 2025
  Do note past performance is not an indicator of future returns
  The securities quoted are for illustration only and are not recommendatory.
  (Source: ACE MF, data collated by PersonalFN Research)  

  Both HDFC Large Cap Fund and Aditya Birla Sun Life Frontline Equity Fund have delivered impressive returns across various timeframes, outperforming the benchmark and category averages in some periods.

  In the short term, HDFC Large Cap Fund outperformed Aditya Birla Sun Life Frontline Equity Fund with a return of 32.58% compared to the latter's 30.89%. HDFC's performance was also slightly above the large-cap category average of 32.53%, indicating its ability to capitalise on recent market trends effectively. Meanwhile, both funds surpassed the Nifty 100 TRI benchmark, highlighting their strong positioning within the largecap segment.

  Over a 3-year horizon, HDFC Large Cap Fund again leads with a 20.34% CAGR in contrast to Aditya Birla Sun Life Frontline Equity Fund's 16.81%. Even though the latter slightly exceeded both the category average and the benchmark, the lag indicates a relatively slower growth trajectory.

  In the long-term horizon of 10 years, while both funds exhibit strong performances, Aditya Birla Sun Life Frontline Equity Fund edges slightly ahead. The fund achieved a CAGR of 14.75%, while HDFC Large Cap Fund posted a CAGR of 14.60%.

  Both funds have generally outperformed their benchmarks and category averages, showcasing their potential for alpha generation.

  For investors with a medium-term investment horizon, HDFC Large Cap Fund appears to be a stronger contender due to its superior performance. However, those with a long-term outlook may find Aditya Birla Sun Life Frontline Equity Fund appealing, given its steady returns over a decade and a slightly superior 10-year CAGR.

• Portfolio Composition: Asset Allocation of Schemes

  The allocation strategies of HDFC Large Cap Fund and Aditya Birla Sun Life Frontline Equity Funds reveal their distinct approaches to portfolio construction.

  Scheme Name	Large Cap %	Mid Cap %	Small Cap %
  HDFC Large Cap Fund	90.28	6.33	-
  Aditya Birla Sun Life Frontline Equity Fund	80.57	4.82	8.11

  Data as of December 31, 2024
  Do note past performance is not an indicator of future returns
  The securities quoted are for illustration only and are not recommendatory.
  (Source: ACE MF, data collated by PersonalFN Research)  

  HDFC Large Cap Fund exhibits a strong emphasis on large-cap stocks, allocating 90.28% of its portfolio to this segment. This high allocation underscores the fund's focus on investing in well-established, financially sound companies with stable growth prospects and lower volatility.

  The allocation of 6.33% to midcap stocks allows for a degree of growth potential while maintaining overall stability within the portfolio. HDFC Large Cap Fund does not allocate any portion of its portfolio to small-cap stocks, showing a risk-averse stance focused on larger, more stable companies.

  In contrast, Aditya Birla Sun Life Frontline Equity Fund adopts a more diversified approach with 80.57% allocation in largecaps, 4.82% in midcaps, and 8.11% in smallcaps. This exposure reflects a willingness to take on slightly higher risk in pursuit of potentially higher returns by tapping into emerging businesses with growth potential.

  HDFC Large Cap Fund's approach aligns well with risk-averse investors seeking stability and consistent returns. Aditya Birla Sun Life Frontline Equity Fund, with its notable allocation to small-cap stocks, may be suitable for investors with a slightly higher risk appetite looking to capture growth opportunities beyond the largecap space.

• Market Volatility: Risk Profile of Schemes

  Risk Ratio	HDFC Large Cap Fund	Aditya Birla Sun Life Frontline Equity Fund
  Standard Deviation (3 Year)	13.23	13.40
  Sharpe	0.23	0.17
  Sortino	0.47	0.34

  Data as of December 31, 2024
  Do note past performance is not an indicator of future returns
  The securities quoted are for illustration only and are not recommendatory.
  (Source: ACE MF, data collated by PersonalFN Research)  

  Both funds show similar levels of volatility, as evidenced by their standard deviations - 13.23 for HDFC Large Cap Fund and 13.40 for Aditya Birla Sun Life Frontline Equity Fund. The slightly higher volatility in Aditya Birla Sun Life Frontline Equity Fund may be appealing to investors willing to take on more risk for the potential of higher returns.

  However, the higher Sharpe Ratio of HDFC Large Cap Fund indicates superior risk-adjusted returns, making it a more attractive option for investors seeking a favourable balance between risk and reward.

  HDFC Large Cap Fund holds a Sortino Ratio of 0.47, higher than Aditya Birla Sun Life Frontline Equity Fund's 0.34. This indicates that HDFC Large Cap Fund has been more effective in generating returns while managing downside risk, making it a potentially better choice for investors who prioritise protection against losses.

  Ultimately, HDFC Large Cap Fund is a strong contender in terms of lower volatility, superior risk-adjusted performance, and better downside risk management. Meanwhile, those willing to accept a slightly higher level of risk for potentially higher rewards may find Aditya Birla Sun Life Frontline Equity Fund to be a suitable choice. Investors should consider their individual risk tolerance and financial objectives when selecting between these two funds.

• Top Holdings of the Large Cap Schemes

  Due to the dynamic nature of Large Cap Funds, top holdings can change frequently. However, analysing current holdings can offer insights into the fund manager's investment philosophy.

  HDFC Large Cap Fund		Aditya Birla Sun Life Frontline Equity Fund
  Company	% Assets	Company	% Assets
  HDFC Bank Ltd.	9.92	HDFC Bank Ltd.	7.82
  ICICI Bank Ltd.	9.40	ICICI Bank Ltd.	7.63
  Larsen & Toubro Ltd.	5.61	Infosys Ltd.	6.55
  Bharti Airtel Ltd.	5.26	Larsen & Toubro Ltd.	4.89
  NTPC Ltd.	5.07	Reliance Industries Ltd.	4.55
  Infosys Ltd.	4.52	Bharti Airtel Ltd.	3.51
  Axis Bank Ltd.	4.42	Mahindra & Mahindra Ltd.	3.14
  ITC Ltd.	4.26	Axis Bank Ltd.	2.87
  Kotak Mahindra Bank Ltd.	3.64	ITC Ltd.	2.77
  Reliance Industries Ltd.	3.24	Sun Pharmaceutical Industries Ltd.	2.58

  Data as of December 31, 2024
  Do note past performance is not an indicator of future returns
  The securities quoted are for illustration only and are not recommendatory.
  (Source: ACE MF, data collated by PersonalFN Research)  

  HDFC Large Cap Fund maintains a relatively concentrated approach. HDFC Bank Ltd. (9.92%) and ICICI Bank Ltd. (9.40%) dominate the portfolio, reflecting a strong tilt towards the banking sector.

  Other key holdings include infrastructure giant Larsen & Toubro Ltd. (5.61%), telecom leader Bharti Airtel Ltd. (5.26%), and energy major NTPC Ltd. (5.07%), highlighting the fund's preference for well-established companies with consistent growth potential.

  Aditya Birla Sun Life Frontline Equity Fund exhibits a more diversified approach. HDFC Bank Ltd. (7.82%) and ICICI Bank Ltd. (7.63%) are also prominent in its portfolio but with a lower concentration compared to HDFC Large Cap Fund.

  The fund allocates a greater proportion to Infosys Ltd. (6.55%) than HDFC Large Cap Fund (4.52%), indicating a stronger focus on the IT sector, and includes a broader mix of sectors such as pharmaceuticals and automotive, with holdings in Sun Pharmaceutical Industries Ltd. (2.58%) and Mahindra & Mahindra Ltd. (3.14%), respectively.

  Investors looking for a focused portfolio with a strong banking and infrastructure emphasis may find HDFC Large Cap Fund more appealing, given its concentrated positions in these sectors. On the other hand, those seeking a well-diversified portfolio with exposure across multiple industries may prefer Aditya Birla Sun Life Frontline Equity Fund.

• Expense Ratio of the Schemes

  Representing the annual fee charged by the fund house, the Expense Ratio plays a crucial role in determining your net returns.

  Scheme Name	Direct Plan Expense Ratio	Regular Plan Expense Ratio
  HDFC Large Cap Fund	1.01%	1.62%
  Aditya Birla Sun Life Frontline Equity Fund	1.01%	1.65%

  Data as of December 31, 2024
  Do note past performance is not an indicator of future returns
  The securities quoted are for illustration only and are not recommendatory.
  (Source: ACE MF, data collated by PersonalFN Research)  

  Both HDFC Large Cap Fund and Aditya Birla Sun Life Frontline Equity Fund have an identical direct plan expense ratio of 1.01%, putting them on equal footing in terms of cost advantage.

  For regular plans, Aditya Birla Sun Life Frontline Equity Fund's expense ratio of 1.65% is slightly higher than HDFC Large Cap Fund's 1.62%. In terms of regular plan expense ratios, HDFC Large Cap Fund has a slightly lower expense ratio at 1.62% compared to 1.65% for the Aditya Birla Sun Life Frontline Equity Fund.

  While the difference may seem marginal, it can lead to a noticeable difference in overall returns over a long-term investment horizon. Thus, HDFC Large Cap Fund offers a slight cost advantage for regular plan investors. That said, investors should not base their decisions solely on expense ratios.

  The quantitative metrics discussed above should be considered in conjunction with qualitative aspects, such as the fund manager's experience and the investment processes and systems implemented by the respective mutual fund house.

• Suitability of Investors to the Schemes

  HDFC Large Cap Fund could be ideal for investors who prioritise stability and prefer exposure to well-established companies with proven track records. The concentrated nature of the portfolio makes it a suitable choice for those with a lower risk tolerance and a long-term investment horizon. Investors looking to achieve steady growth and returns with minimal exposure to smaller-cap downside risks may find this fund a valuable option for their core portfolio.

  Aditya Birla Sun Life Frontline Equity Fund could appeal to investors with a moderate risk appetite who prefer a more diversified investment approach. This fund offers the potential for higher returns by balancing large cap stability with opportunities for growth in smaller-cap segments.

To Summarise...

In the current uncertain environment, large-cap mutual funds stand out as a reliable choice, focusing on well-established companies with strong fundamentals and resilience to global economic shocks, offering stability amid market turbulence.

Large-cap funds like HDFC Large Cap Fund and Aditya Birla Sun Life Frontline Equity Fund may provide stability and downside protection in volatile markets, making them a strong addition to a core portfolio. However, achieving steady, long-term wealth creation ultimately depends on selecting funds that align with your financial goals and risk tolerance. Ensure your portfolio is well-diversified, regularly monitor performance, and stay put through market fluctuations to meet your envisioned objectives.

Happy investing!

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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.