Investors looking for stable returns and cannot tolerate high volatility should consider large-cap funds/index mutual funds. Large-cap funds generate returns of 12% to 15% annually, while index funds have historically generated returns of 10% annually. In this article we will talk about 3 Large Caps and Nifty Index Funds I (Suresh KP) am investing in in 2024. I also provide some FAQs in case you want to continue following my portfolio.
What is a large-cap investment trust?
A large-cap fund is an investment trust that primarily invests in large-cap stocks. These companies are typically considered to be among the top 100 companies by market capitalization, although this can fluctuate somewhat depending on market conditions and other factors. These companies are often established, have a proven track record, and are generally considered less volatile than mid-cap and small-cap stocks.
Simply put, large-cap funds invest in: Large-cap stocks with stable performance In India.
Investing in large-cap funds can provide investors with exposure to well-known, stable companies that have a history of steady growth and may offer regular dividends. These funds often track benchmark indices such as the Nifty 50 and Nifty 100 and aim to replicate their performance.
What is Nifty50 Index Mutual Fund?
Nifty50 Index Mutual Fund is an investment trust that aims to replicate the performance of the Nifty50 Index. Nifty50 is one of India’s major stock market indices managed by the National Stock Exchange of India (NSE). It comprises of the 50 largest and most actively traded stocks listed on the NSE, spanning various sectors of the economy.
Nifty50 Index Mutual Fund invests in the same stocks that make up the Nifty50 index in proportions equal to the index weight. The objective is to closely reflect the performance of the Nifty50 index.
How did you filter these funds for your investment plan?
- Financial goals – My goal is to build an asset that will generate an annualized return of 12% to 15% over a 10+ year period and use it for retirement planning.
- tenure – More than 10 years
- risk appetite – Moderate to high risk. However, while I have a separate portfolio of mid-cap and small-cap funds, I want to avoid very high risks as part of this set of large-cap investments.
Suresh KP’s 3 Large Cap/Index Mutual Funds to invest in in 2024
I would like to introduce three funds in which I am currently investing.
#1 – UTI Nifty Index Mutual Fund
#2 – Japan India Large Cap Fund
#3 – HDFC Top 100 Fund
3 Large Cap/Index Mutual Funds Suresh KP is investing in in 2024 – Details about these funds
So let’s take a closer look at these mutual fund schemes, their investment strategies, performance, and why I chose these funds to invest in.
#1 – UTI Nifty Index Mutual Fund
Investment strategy:
This is a scheme that invests in stocks of companies that make up the Nifty 50 Index and aims to earn returns equivalent to the Nifty 50 Index through passive management.
Absolute return:
- 1 year return – 21.6%
- 2 year return – 38.5%
- 3 year return – 51.9%
- 5 year return – 104.7%
- Return over 10 years – 254% (Rs 100,000 to Rs 3,540,000)
Annual rate of return:
- 1 year return – 21.6%
- 2 year return – 17.6%
- 3 year return – 14.9%
- 5 year return – 15.4%
- 10 year return – 13.4%
Why invest in this fund?
- It is an index fund that invests 100% in Nifty-50 stocks.
- Currently, 81.5% of the company’s stock portfolio is invested in large-cap stocks, 3.2% in mid-cap stocks, and the rest in other stocks.
- As part of the stock portfolio, the top 10 stocks of the company are HDFC Bank, Reliance Industries, ICICI Bank, Infosys, L&T, TCS, ITC, Bharti Airtel, Axis Bank and SBI.
- With a direct plan expense ratio of 0.21% and a beta of 0.99 (which ideally should be 1 since it replicates the index), this fund has generated an annualized return of 13.1% since inception. This is twice the return compared to bank fixed deposits.
- Index funds reproduce a specific index and provide stable returns over the medium to long term. Historically, the Nifty 50 has generated returns of over 10% annually. Moderate to high risk investors who want to invest for medium to long term can invest in such index funds.
- In fact, you can choose index funds with lower expense ratios and tracking errors. Make sure your fund has past performance to check for tracking errors.
#2 – Japan India Large Cap Fund
Investment strategy:
The scheme aims to generate long-term capital growth by investing primarily in large-cap stocks and equity-related instruments.
Absolute return:
- 1 year return – 37.6%
- 2 year return – 69.1%
- 3 year return – 94.8%
- 5 year return – 140.9%
- Return over 10 years – 418.7% (Rs. 10 million to Rs. 5.18 million)
Annual rate of return:
- 1 year return – 37.6%
- 2 year return – 30.0%
- 3 year return – 24.8%
- 5 year return – 19.2%
- 10 year return – 17.8%
Our thoughts on the fund:
- This fund is a large fund that invests 98% in stocks and the rest in TREPS.
- Of the stock portfolio, 66% is invested in large-cap stocks, 13% in mid-cap stocks, and the rest in other stocks.
- As part of its equity portfolio, the fund has investments in HDFC Bank, Reliance, ICICI Bank, SBI, ITC, Axis Bank, L&T, Infosys, Tata Power and Bajaj Finance.
- With a direct plan expense ratio of 0.83% and a beta of 0.74, the fund has generated an annualized return of 16.95% since inception.
- The fund has outperformed its benchmark over 1-, 3-, 5- and 10-year periods. 10 large-cap mutual funds with the highest returns over the past five years.
- Large-cap funds provide stable returns but involve moderate to high risk. If you are an investor with a medium to high risk appetite, willing to invest for more than five years, and expect to earn between 12% and 15% per annum (but not guaranteed), consider investing in such funds. You can invest.
#3 – HDFC Top 100 Fund
Investment strategy:
The scheme aims to provide long-term capital appreciation/return by investing primarily in large cap stocks.
Absolute return:
- 1 year return – 32.7%
- 2 year return – 57.0%
- 3 year return – 76.4%
- 5 year return – 117.8%
- Return over 10 years – 309.6% (Rs 100,000 to Rs 4,090,000)
Annual rate of return:
- 1 year return – 32.7%
- 2 year return – 25.2%
- 3 year return – 20.7%
- 5 year return – 16.8%
- 10 year return – 15.1%
Our thoughts on the fund:
- This fund is a large fund that invests 98% in stocks and the rest in TREPS.
- Of the stock portfolio, 80% is invested in large-cap stocks, 5.5% in mid-cap stocks, and the rest in other stocks.
- As part of its equity portfolio, the fund has investments in HDFC Bank, Reliance, ICICI Bank, NTPC, L&T, Bari Airtel, Infosys, ITC, Axis Bank and Coal India.
- With a direct plan expense ratio of 1.05% and a beta of 0.95, the fund has generated an annualized return of 14.8% since inception.
- The fund outperformed its benchmark over one, three, five, and 10-year periods.
- As shown earlier, large-cap funds offer stable returns but come with moderate to high risk. If you are an investor who takes medium to high risks and is willing to invest for more than five years, you can invest in such funds.
What are some frequently asked questions about these large-cap and index funds?
#1 – Can investors replicate my portfolio?
It depends on your needs. Everyone has financial goals and investments should be aligned with those goals. If your financial goals, tenure, and risk appetite are in line with mine, then yes, you can replicate my portfolio.
#2 – Are these the only three best performing mutual funds?
No, there are hundreds Best Mutual Funds for the Next 10 Years Or 5 years. My portfolio (along with my spouse) consists of 8-10 funds and I can’t include them all in this category. So, I picked a few funds from the large-cap stocks/index category.
#3 – Will I continue to use these funds for the next 10 years?
I can’t say. As I indicated earlier, I review my portfolio frequently and if I see any questionable areas, I review and close the portfolio. I previously invested in Axis Blue Chip Fund and after analyzing and writing, Worst performing Axis Mutual Fund articles, I finished them. As for index funds, once they hit a new high, they continue to book profits and reinvest them again through STP for the next 9-10 months. With NetSummary, review your portfolio regularly and make changes as needed.
#4 – When exiting these funds, will investors be contacted?
That may or may not be the case. As I indicated earlier, I continue to review and make changes (if any) to my mutual fund portfolio. If future articles are updated on the same topic, they may show my latest mutual fund portfolio.
#5 – Are these high return mutual funds?
You can only generate high returns if you take high risks. These large-cap funds are aimed at moderate to high risk takers and offer stable returns of 12% to 15% (but not guaranteed).Recently we wrote about Low risk, high return investment trusts based on value research You can check it first. If you’re aiming for a high-return fund, consider taking risks and choose mid-cap or small-cap mutual funds.
#6 – How can I maximize my returns from these large-cap and index funds?
Due to the volatility in the stock market over the past three years, I have continued with my old strategy.
- Continue monthly SIP for 1 yearcent week of the month
- For lump sum investments, invest your money in liquid funds and perform STP in these mutual funds through a systematic capital transfer plan (STP) for the next 6-9 months. I use the Kuvera platform and it’s easy to do with just a few clicks.
#7 – If there are better funds in this category, why did you choose only these funds?
My motto is to pursue not only high returns but also stable returns over the medium to long term. There are some large-cap stocks and index funds, but I only invest in 2-3 funds from these categories. If you think there are better funds from such category, you can go ahead and invest in such funds.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
