About Large Cap Mutual Funds
Large-cap mutual funds are equity funds that invest mainly in the top 100 companies of India. Being some of the most renowned organisations in India, the majority of the Indian population uses their products daily. Hence, such companies own a huge market share.
Furthermore, these funds invest most of their corpus in large-cap companies. Generally, businesses with a market cap of ₹20,000 crore or more are considered to be large-cap stocks.
How Do Large Cap Mutual Funds Work?
If you want to invest in large players in the Indian stock markets, you may consider investing in certain large-cap mutual funds that invest your money predominantly in the equity of large-cap companies. These companies have the distinction of being among the top 100 companies in the Indian ecosystem of industries.
You could say that these companies are famous for their growth and expansion potential and for their upstanding credibility over the years. These are the companies whose products and services are used daily by Indians.
Large-cap mutual funds invest in the equity of large-cap companies with a market capitalisation of ₹20,000 crore or more. These mutual funds aim to seek capital appreciation for investors with a long-term perspective on investment.
Conservative investors may invest in such funds as they provide long-term investment for the long haul, aiming at the achievement of returns of large-cap companies that may tide over market volatility.
Factors to Consider Before Investing in Large-Cap Mutual Funds
Large caps may be potentially lucrative due to their consistent nature and potential long-term profile of investing, but some considerations must be taken into account:
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Think of charges like expense ratios that may eat into potential profits. When choosing large-cap funds, expense ratios may be high, so it’s worth considering funds with low expense ratios, but those that offer the potential of high capital appreciation in the long term.
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Reflect on the possible investment risks you may be taking when investing in large-cap funds. However reputable the companies may be, there is always the possibility of adverse market conditions affecting any gains. So you must evaluate your own risk profile and review the equity that the fund is investing in.
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Related to the factor of risk is your unique style of investment, considering your individual financial plans and requirements. Large-cap funds may be considered by investors who have a long-term path to achieving returns paid out.
Finally, you should think of the taxability of your returns, should you potentially gain any with investment in large-cap mutual funds. In case you do gain from your investment, you will be liable to pay tax on your capital gains.
Top 5 Large Cap Mutual Funds
The following are the top Large-Cap Funds in India:
|
Name of the Fund |
AUM (₹ Cr) |
CAGR 5Y |
Expense Ratio |
Alpha |
Sharpe Ratio |
|
8,160.47 |
32.27 |
1.14 |
6.24 |
0.15 |
|
|
30,169.71 |
32.14 |
0.75 |
16.19 |
-0.30 |
|
|
5,627.47 |
31.09 |
0.61 |
6.99 |
0.32 |
|
|
5,762.54 |
31.03 |
0.83 |
6.59 |
0.31 |
|
|
38,002.68 |
30.54 |
0.72 |
7.04 |
-0.63 |
The above-mentioned funds are for informational purposes only and are not recommendations. The funds are ranked on 5-year CAGR as of December 23, 2025.
ICICI Pru Infrastructure Fund
The ICICI Pru Infrastructure Fund ranks 1st based on its 5-year CAGR of 32.27%. It manages an AUM of ₹8,160.47 crore and carries an expense ratio of 1.14%, which is the highest among the five funds. The fund's alpha stands at 6.24, showing steady outperformance, while its Sharpe ratio of 0.15 indicates the risk-adjusted return profile typical of the infrastructure sector.
Quant Small Cap Fund
The Quant Small Cap Fund ranks 2nd with a 5-year CAGR of 32.14%. It has a substantial AUM of ₹30,169.71 crore and an expense ratio of 0.75%. This fund stands out with a very high alpha of 16.19, the highest on the list, suggesting aggressive management. However, its Sharpe ratio of -0.30 suggests higher volatility relative to the returns generated over this period.
Aditya Birla SL PSU Equity Fund
The Aditya Birla SL PSU Equity Fund ranks 3rd with a 5-year CAGR of 31.09%. It has the lowest AUM on this list at ₹5,627.47 crore and boasts the lowest expense ratio of 0.61%. The fund has delivered an alpha of 6.99 and features the highest Sharpe ratio among the group at 0.32, indicating relatively better risk-adjusted performance.
SBI PSU Fund
The SBI PSU Fund ranks 4th with a 5-year CAGR of 31.03%, trailing the third spot by a thin margin. It has an AUM of ₹5,762.54 crore and an expense ratio of 0.83%. With an alpha of 6.59 and a Sharpe ratio of 0.31, its performance metrics are very closely aligned with other top-performing PSU-themed funds in this category.
Motilal Oswal Midcap Fund
The Motilal Oswal Midcap Fund ranks 5th with a 5-year CAGR of 30.54%. It holds the highest AUM among the five funds at ₹38,002.68 crore and maintains an expense ratio of 0.72%. While it has a strong alpha of 7.04, its Sharpe ratio of -0.63 is the lowest in the group, reflecting the inherent price swings associated with mid-cap volatility.
Features of Large-Cap Mutual Funds
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Risk and return: As all equities are affected by market fluctuations, so is the NAV (Net Asset Value). Although there are fluctuations, these movements may not be as considerable as with mid and small-cap funds. Hence, investing in the best large-cap mutual funds can offer stability to your portfolio.
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Analysing the expense ratio of the scheme: The expense ratio refers to the fees charged by the large-cap fund houses to manage the investments. Hence, as a best practice, it is better to look for fund houses with a lower expense ratio for maximised returns. But expense ratio should not be the only deciding factor.
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Long-term investments: Despite being more stable, large-cap mutual funds are also susceptible to market volatility, which may lead to underperformance at times. Hence, investors who are looking to invest for the short term may not find promising returns.
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Considering financial goals: Though they are exposed to market risks, large-cap funds can offer relatively stable returns. Hence, this is one of the reasons why investors may often prefer it for their retirement plans. These funds can also be ideal for novice investors who want to gain market exposure without taking high risks.
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Long-term investment: Investors wishing to experience large-cap mutual funds’ full potential should ideally stay invested for 5-7 years. The long-term horizon balances out short-term underperformance and thereby ensures stable returns. Hence, large-cap funds are ideal for generating long-term wealth.
Advantages of Investing in Large-Cap Mutual Funds
Some of the advantages of investing in large-cap funds include:
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Stability: Since large-cap funds have a higher market share and are relatively less volatile than mid-cap or small-cap funds, these firms offer more stability and consistent returns. All these factors make it a safer investment option. Besides, over the long term, it can also give higher returns than short-term debt funds.
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High rate of liquidity: Due to high trading volumes of the underlying stocks, Large-cap funds offer a high rate of liquidity in normal market conditions. In periods of market volatility, investors can easily liquidate their portfolios. However, selling during a downturn lock in losses, and while large caps are more liquid than mid or small caps, market stress can still impact liquidity across all asset classes. Additionally, fund managers can maximise their returns by buying and selling stocks when required.
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Diversification: Besides the benefit of having options to invest in India’s leading companies, large-cap funds are likely to withstand the market volatilities better than a mid or small-cap fund due to their well-diversified portfolios across various sectors. Thus, it could give your investment portfolio stability during market volatility. However, it is vital to note that diversification does not promise investment returns to eliminate the risks of loss.
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Capital appreciation and dividends: Given the above-mentioned factors, large-cap funds are more likely to offer benefits for an investment period of 5-7 years. In mutual funds, capital appreciation occurs when the value of your investment increases. Certain large-cap funds may also offer regular dividends because of their consistent profit generation. Note that the dividends are taxed in your hands at your applicable income tax slab rate. It is also subject to a 10% TDS in case it exceeds ₹10,000 in a financial year.
Risks Involved in Large Cap Mutual Funds
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Market risks: Risk is inherent in all equity investments and indicates the underperformance of markets due to various reasons. Despite being relatively stable, large-cap funds are susceptible to market risks and can still experience significant declines during broad market downturns, as seen during major crises.
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Investment costs: The investment costs associated with such funds include the exit load and expense ratio and exit load. The expense ratio refers to the fees charged by the Asset Management Company (AMC), including operational and management fees. A lower expense ratio leads to higher potential profits. An exit load is a fee charged if you redeem your units before a specified period.
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Concentration risks: Concentration risks occur when a fund’s investments are heavily focused on a small number of stocks, sectors, or themes. While a diversified large-cap fund mitigates this risk, it is still present at a macro level. This is because they hold similar stocks (creating overlapping portfolios) and the large-cap indices themselves can be concentrated in a few key sectors.
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Interest rate risk: Interest rate risk is primarily a concern for debt funds, as rising interest rates decrease the value of existing bonds. While less directly impacted, the performance of large-cap equity funds can still be indirectly affected by rising interest rates, which can slow the economy and reduce overall market activity.
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Liquidity risk: Liquidity risk arises in general markets when a security or asset cannot be sold quickly or at a fair price. For large-cap funds, this risk is generally low, as large-cap stocks are highly liquid. However, in rare cases of extreme market stress, liquidity can be affected. The more relevant risk for investors is being forced to sell their holdings during a downturn, thereby locking in losses.
Who Should Invest in Large-Cap Mutual Funds?
Large-cap mutual funds are usually fit for conservative equity investors. Here’s who can consider investing in large-cap mutual funds:
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Those who wish to invest in India’s top companies: Companies like these are headed by proven market leaders and are highly successful business models. These are firms that have already established their trust in the industry. Hence, investing in a large-cap fund makes you a partial owner of one of India’s top companies.
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Those who are looking for less volatility: The top large-cap mutual funds usually invest in highly established organisations in different domains, which are more likely to withstand market volatility and challenging economic conditions. They have a solid supply chain, a significant market share, and a resilient business model. In case stocks from one sector show high vulnerability to market movements, the other sectors can cover up for their effects.
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Those looking for a solid core portfolio: Although large-cap stocks may offer you lower returns compared to mid and small-cap stocks during short-term rallies, some of them have the potential to offer double-digit returns. Hence, the best large-cap mutual funds can turn out to be a solid core portfolio.
Why Invest with Angel One?
Angel One provides a secure and streamlined investing process to investors of any status.
1. Secure and Controlled System
Angel One is accredited in SEBI, AMFI, NSE and BSE and your investments in large-cap mutual funds are well protected and controlled by all means and in a professional manner.
2. Paperless, Easy Investment
Investing in large-cap mutual funds can be done in a completely paperless, fully digital process on the Angel One website or mobile application, which can be onboarded quickly, tracked effortlessly, and the portfolio can easily be managed.
3. Professional Advice and Open Prices
Angel One offers professional research, customised services, and no-hassle pricing with no under-the-carpet pricing schemes to enable investors to make knowledgeable decisions that are aimed at wealth creation and stability in the long term.
Taxability of Large Cap Mutual Funds
Just as the other equity assets, large-cap funds also receive a similar tax treatment as of the current financial year (FY 2025-26). Profits earned through the holding period of less than a year are known as Short-Term Capital Gains (STCG). A tax of 20% is due for this profit.
Profits earned through a holding period of more than a year are known as Long-Term Capital Gains (LTCG). As per the current tax rate, from Budget 2024, LTCG of up to ₹1.25 lakh in a financial year is tax-exempt. If the gains exceed this limit, 12.5% taxes are charged without indexation advantage.
Dividends earned on large-cap mutual funds are added to the investor’s taxable income and taxed at the rate as per the income tax slab. There is also a 10% TDS on dividend amounts exceeding ₹10,000 in a financial year, effective April 1, 2025.
How to Invest in Large-Cap Mutual Funds?
Investing in the large-cap Mutual Fund is hassle-free when done through your Angel One account. You just have to follow these simple steps:
Step 1: Log in to your Angel One account
Note: In case you do not have an account with Angel One, you can open a demat account with us in under a few minutes by submitting the necessary documents.
Step 2: Determine a large-cap fund that suits your needs and risk profile.
You can learn more about each large-cap fund on the Angel One app. Things to consider at this stage are:
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Search for the fund you want to invest in.
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Analyse the fund’s past performance, tax incidence, and the sectors and companies it invests in. You can also calculate the potential returns using the calculator.
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Evaluate the fund’s level of risk, its ratings and expense ratio.
Step 3: Finalise the large-cap fund(s) you want to invest in.
Navigate to the Mutual Funds section and look for it.
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Decide whether you want to invest via SIP or make a one-time investment
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Decide your monthly SIP date. Now, enter the amount you want to invest and choose the payment mode.
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After placing the order, you can create an AutoPay to make hassle-free future instalments in case of SIP investments.
