The S&P BSE Sensex generated a whopping growth of 32% over the past year!
Had you invested in the top large cap mutual funds in January 2017, you would be sitting on returns in excess of 35%.
In other words, had you put in Rs 1 lakh in any of the top large cap funds, the gains would now be in excess of Rs 35,000!
Sure, this looks all hunky-dory in hindsight.
In reality, no one knows where the stock market is headed and one needs to adopt a prudent approach when investing.
With the share prices of companies soaring to new highs, the valuations too are moving to the grossly overvalued zone. If the positives fail to outweigh the negatives, the market may soon slide lower. At such times, large caps are expected to be better poised to handle market volatility vis-à-vis mid and small caps.
Some large caps take an opportunistic allocation to mid-caps and offer the perfect mix of stability and growth. But such aggressive funds may find it difficult to curb the downside risk. Therefore, it is pertinent to review large cap funds even on its ability to limit downside during falling markets.
PersonalFN takes a look at the top large cap funds of the past year.
Top Performing Large Cap Funds Over 1-Year
Data as on January 19, 2018.
1 year returns are absolute. 3 year returns are compounded annualised.
*Average exposure over 12 months.
(Source: ACE MF, PersonalFN Research)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.
Large cap schemes such as IDFC Focused Equity Fund, Axis Focused 25 Fund, BOI AXA Equity Fund, Reliance Vision Fund and Invesco India Growth Fund lead the list with returns in excess of 35%. Not many of those invested in these schemes would have been expecting such atypical returns.
As stocks of mid cap and small cap companies outperformed their large cap counterparts in the past one year, schemes that took an opportunistic exposure to mid and small sized companies were among the top large cap funds of the past year.
However, this might not work in the favour of such opportunist large cap funds in all market cycles. In a market downside, mid caps can drag the return lower. Adding mid caps to the portfolio increases the risk, hence, the funds may suffer from a higher volatility. But investors with a long-term investment horizon could benefit with higher returns.
You need to pick the scheme based on its risk-return parameters vis-a-vis other peers and the quality of fund management. Not all mutual funds have the capability to perform consistently. You need to analyse the returns of multicap funds across multiple periods and market cycles.
Shortlist the funds that have consistently outraced the market and their peers. The scheme you select should match your risk profile and be suitable to meet your investment goals.
Should you invest in large cap funds now?
Stable businesses, greater market share, quality of management, and the sustainability prospects are factors that seem convincing to have exposure to large caps at the current level. Large blue chip companies with strong balance sheets and proven track records could help ride the wave of short-term volatility to a certain extent.
Therefore, diversified equity funds with a predominant large cap allocation can offer stability to your investment portfolio. At the same time, funds that are restrictive in their investment approach or those funds that invest only in a concentrated portfolio of large caps can be volatile and may fail to generate adequate returns over the long term.
As markets are unpredictable, investors need to invest cautiously without compromising on long-term growth. Large cap funds are suitable for those investors who are looking for stable, market-beating returns over the long term. Picking funds with the capacity to deliver high returns at low risk becomes crucial.
Only a handful of funds are able to deliver a superior risk-adjusted performance. Hence, all large cap funds are unable to consistently outperform across market cycles. Hence, you need to pick the right fund prudently.
How to pick the best large cap mutual funds for 2018?
When picking mutual fund schemes , you need to analyse the risk-return parameters vis-a-vis other schemes and the quality of fund management. All mutual funds do not have the capability to perform consistently.
You need to analyse the historical data of returns from large cap funds across multiple periods and market cycles. Shortlist the funds that have consistently outraced the market and other schemes. Select the one that matches your risk profile and suitably meets your investment goals.
But apart from this, you need to keep a watchful eye on how mutual funds adhere to the regulator’s guidelines for the categorisation and rationalisation of mutual funds.
According to SEBI’s new classification, large cap stocks would be those that rank in the top 100 list in terms of market capitalisation. Fund investing over 80% in large caps would be categorised as large cap mutual funds.
The SEBI has defined another category as Large & Mid Cap Funds. Here, the fund needs to invest a minimum of 35% each in large cap and mid cap stocks. The category choice is limited and only one scheme is allowed per category.
Whenever the mutual fund houses release the list of schemes based on the new categorisation, take a closer look at the asset allocation. A significant change in the investment objective or asset allocation, to different market-caps, may render the past performance of the fund irrelevant. If the investment objective and asset allocation of the scheme remains the same, a change in categorisation will not matter.
Those who are unsure about which mutual fund schemes to invest in may try PersonalFN’s unbiased mutual fund research services. Along with quantitative parameters such as performance, PersonalFN also considers qualitative parameters such as portfolio characteristics while analysing mutual fund schemes.
One such service of PersonalFN is FundSelect. This service helps you identify the top-performing funds across varying market caps and investment styles——be it largecap, midcap, multicap, value-based or balanced funds——highlighting the underperforming or average performing ones too.
FundSelect will assist you in discovering the "best of the best" equity as well as debt funds in the market. It will help you build a solid mutual fund portfolio through disciplined investing. So, you have an opportunity to benefit from market beating returns generated by quality mutual funds.
So don't hesitate...give FundSelect a try Now.
MustRead
Best Midcap Funds For 2018. Look Before You Leap!
DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014
About the Company including business activity
Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.
QIS was promoted by Mr. Ajit Dayal with an objective of providing value-based information / views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.
'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.
Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.
Disciplinary history
There are no outstanding litigations against the Company, it subsidiaries and its Directors.
and condition on which its offer research report. For the terms and condition for research report click here.
Details of associates
- Money Simplified Services Private Limited;
- PersonalFN Insurance Services India Private Limited;
- Equitymaster Agora Research Private Limited;
- Common Sense Living Private Limited;
- Quantum Advisors Private Limited;
- Quantum Asset Management Company Private Limited;
- HelpYourNGO Private Limited;
- HelpYourNGO Foundation;
- Natural Streets for Performing Arts Foundation;
- Primary Real Estate Advisors Private Limited;
- Rahul Goel;
- I V Subramaniam.
Disclosure with regard to ownership and material conflicts of interest
- Neither QIS, it’s Associates, Research Analyst or his/her relative have any financial interest in the subject Company , except QIS receives fees for providing research to Quantum Equity Fund of Fund (QEFoF) which is Fund of Fund scheme managed by QMF.
- Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report.
- Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront /annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices
Disclosure with regard to receipt of Compensation
- Neither QIS nor it's Associates have any compensation from the subject Company in the past twelve months.
- Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company in the past twelve months.
- Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company in the past twelve months.
- Neither QIS nor it’s Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months except from Axis Bank Limited under a service agreement.
- Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report
General disclosure
- The Research Analyst has not served as an officer, director or employee of the subject Company.
- QIS or the Research Analyst has not been engaged in market making activity for the subject Company.
Subject Company means Mutual Fund Schemes
Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Email: info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222
SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013
Add Comments
| Comments |
singh.sameer19@gmail.com
Aug 21, 2018
Hello, I am a your loyal and regular website reader and finally thought of asking you a question.
I am giving my portfolio below. I am 33 now and have a kid of 4 year old.
My monthly income with spouse is 2 lakh. I have home loan of 50 lakh.
I am doing investment in all four mutual funds from last five years.
My goal is to have 1 Crore in next 15 years for kid’s education and 2 Crore in next 25 for retirement at the age of 60. I have taken inflation in mind.
Can you please review the information and help me if I can complete my goals. Appreciate if you give some suggestions. Thank you.
5,000 per month - Reliance Regular Savings Growth Equity NOW Reliance Value Fund
5,000 per month - DSP Blackrock Top 100
5,000 per month - Birla Sunlife Front Line Equity
5,000 per month - SBI bluechip fund growth direct
10,000 per month - RD
3 lakh FD
1 Crore Term Insurance Insurance cover
Total 10 Lakh LIC cover from Jeevan anand and Jeevan tarang |
1