Mutual Funds: While small cap funds are like a hot potato, check large cap schemes which rose over 40% in past 1 year

view original post

Prior to investing into a mutual fund scheme, investors tend to ascertain the past returns of the scheme and compare the same with other funds in the same category.

Although historical returns of a mutual fund scheme do not guarantee its future returns, investors — invariably — give a lot of importance to the past returns.

Small cap mutual funds are believed to hold a lot of froth, and AMFI has even directed fund houses to carry out what is known as a ‘stress test’ on a monthly basis so that the retail investors are apprised of the liquidity of assets in small cap schemes.

Some fund houses including Tata Mutual Fund and Nippon Mutual Fund even impose curbs on investing in their small cap schemes. Kotak MF, meanwhile, lifted these curbs early this month.

Amid all this, it is understandable to keep small cap mutual funds at an arm’s length, and contemplate investing in the large cap schemes instead.

We list out the top-performing schemes in the large cap category, which have yielded more than 40 percent return in the past one year.

Large cap funds

These are mutual fund schemes, which invest at least 80 percent of their investment in large cap stocks. Large cap stocks refer to the securities of companies which are positioned among top 100 companies when ranked on the basis of their market capitalisation.

There are 31 mutual fund schemes, which fall in the category of large cap funds with total AUMs amounting to 3.45 lakh crore, as on June 30, 2024, the AMFI data shows.

(Source: AMFI; Returns as on July 8, 2024)

As the table above shows, the highest return of 46.68 percent was delivered by JM Large Cap Fund followed by Bank of India Bluechip Fund, which gave an annual return of 45.30 per cent in the past one year ending July 8, 2024.

Other large cap funds which gave returns in the upward of 40 percent per annum included Nippon India Large Cap Fund, Taurus Large Cap Fund, Baroda BNP Paribas Large Cap Fund and Quant Large Cap Fund.

It is noteworthy to mention that investors should evaluate the potential of a mutual fund scheme not only on the basis of its past returns but also on a range of other factors such as the category it belongs to, reputation of fund house, past performance of the fund house as well as that of the fund manager, and overall macroeconomic scenario, allocation to equity by the scheme’s assets, among other factors.

Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.