Before investing in a mutual fund scheme, investors are expected to examine its past returns in relation to similar schemes in the same category. This gives investors a perspective of the scheme’s overall growth potential. Although wealth advisors often tell investors not to emphasise too much on historical returns, past returns tend to influence retail investors’ investment decisions.
Here, we give a lowdown on the past five years’ returns delivered by large-cap mutual funds. Let us first understand what exactly are large-cap funds.
What are large-cap funds?
Large-cap mutual funds refer to schemes that invest a minimum of 80 per cent of assets in large-cap stocks, as per Sebi’s categorisation of mutual fund schemes. There are 32 schemes in the large-cap mutual fund category with a total asset size of ₹3.79 lakh crore. Out of this asset size, September 2024 alone witnessed an inflow of ₹1,769 crore.
Nine mutual fund schemes delivered an annualised return of 19 per cent and above in the past five years. When we examine the past returns across the category of large-cap funds, these schemes gave a five-year return of 19.23 per cent, according to Morning Star data as on October 10, 2024.
(Source: AMFI; Returns as on Oct 10, 2024)
As we can see in the table above, the maximum returns were given by Nippon India Large Cap Fund (22.35 per cent), while the minimum returns were posted by Edelweiss Large Cap Fund (19.49 per cent) and Bandhan Large Cap Fund (19.64 per cent). These top-performing large-cap mutual funds gave an average of 20 per cent in the past five years. This means if someone had invested ₹1 lakh in the scheme five years ago, it would swelled to ₹2.48 lakh.
It is vital to see the size of the scheme before investing. In terms of asset size, the biggest large-cap mutual fund schemes are ICICI Prudential Bluechip Fund ( ₹64,835 crore), HDFC Top 100 Fund ( ₹37,522 crore), Nippon India Large Cap Fund ( ₹34,187 crore) and Aditya Birla Sun Life Frontline Equity Fund ( ₹30,593 crore).
Meanwhile, it is vital to understand that past returns do not guarantee any mutual fund scheme’s future returns. Historical returns, while giving an indication, may or may not continue in the future.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.