Large-cap mutual fund investment: When it comes to investing in equity mutual funds, investors have a variety of options available, including large-cap, mid-cap, small-cap, multi-cap, sectoral or thematic, focused, and dividend-yield funds. It is crucial for investors to align their investment choices with their financial objectives and risk tolerance. Among these fund types, large-cap equity mutual funds are generally considered more secure compared to others. This is because these funds primarily invest in stocks of well-established companies with strong financial performance and lower volatility.
Earlier this week, the Association of Mutual Funds in India (AMFI) announced the updated market capitalisation categorisation, detailing the alterations in large, mid, and small cap segments. The new threshold for large cap companies is Rs 84,300 crore, up from Rs 67,000 crore as of December 2023. The mid cap category now has a cut-off of Rs 27,600 crore, an increase from the previous Rs 22,000 crore. The large cap companies, comprising the top 100 entities, now account for 63.6% of the market capitalization, reflecting a slight decrease from 64.4% in December 2023.
Among the top large cap mutual funds, Mirae Asset Large Cap mutual fund has underperformed in the last few years due to various reasons. The fund, which was previously well-regarded for its growth-focused investment strategy, has experienced a decline in performance due to the market’s current favouring of value stocks over growth stocks.
As a result, the fund has significantly lagged behind both its benchmark index and its industry peers since the beginning of 2022. This underperformance stands in stark contrast to its previously solid track record of consistently outperforming the market over the long term.
Launch date: 4 April 2008
Category: Equity
Type: Large Cap
AUM: Rs.37,631 crore
Benchmark: NIFTY 100 TRI
Min. investment: SIP Rs 1,000 & Lumpsum: Rs 5,000
Top 5 holdings are: HDFC Bank Ltd., Reliance Industries Ltd., ICICI Bank Ltd., Infosys Ltd., Axis Bank Ltd.
New entrants in portfolio
Bharti Hexacom, Oil & Natural Gas Corporation, Tata Motors, Vedanta (April). Cipla, Macrotech Developers, R R Kabel (May).
| Period | Mirae Asset Large Cap | Category average |
| 1 month | 7.61% | 7.23% |
| 3 months | 10.27% | 9.73% |
| 6 months | 15.57% | 18.66% |
| 1 year | 27.9% | 35.5% |
| 3 years | 15.73% | 18.82% |
| 5 years | 17.44% | 18.95% |
Gaurav Misra, Head of Equity at Mirae Asset Investment Managers (India), told CNBC TV18 that the fund has been underperforming due to its disciplined investment strategy.
He said the fund strictly follows a principle of refraining from investing in stocks that have valuations surpassing their fundamentals. It also executes selling of positions when valuations reach a point of being unjustifiable.
“This conservative approach led to the fund missing out on the recent rally driven by strong reratings in sectors like capital goods and defense,” Misra said.
Misra further said: “Although the fund’s five-year performance is decent, its more recent returns could have been stronger. This means the portfolio hasn’t fully benefited from the market’s rerating in certain sectors.”
When asked about the game plan to generate alpha for Mirae Asset Large Cap Fund, Mishra said: “From the top 100, I believe selecting stocks with appropriate strong over weights depending on the degree of conviction is the first step. Within this the core approach to stock selection has already been outlined before. Furthermore, at the portfolio level keeping a blend of quality, structural growth opportunities and deep value, cyclical and special situation plays should be appropriate ways to capture the opportunity presented by the market.”
Peer comparison (Returns)
| Fund name | 1M | 6M | 1Y | 3Y | 5Y | 10Y |
| Mirae Asset Large Cap Fund | 7.61% | 15.57% | 27.9% | 15.73% | 17.44% | 15.77% |
| ICICI Prudential Bluechip Fund | 6.75% | 19.56% | 39.79% | 22.57% | 20.78% | 15.95% |
| Canara Robeco Bluechip Equity Fund | 7.11% | 18.72% | 32.63% | 17.93% | 20.9% | 15.84% |
| Baroda BNP Paribas Large Cap Fund | 7.8% | 24.45% | 43.55% | 21.74% | 21.21% | 16.01% |
| Edelweiss Large Cap Fund | 7.27% | 19.0% | 34.87% | 20.33% | 20.33% | 15.59% |