‘Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria’ – John Templeton, American-British fund manager.
The above quote by Templeton serves as a cautionary reminder that markets are cyclical and that excessive optimism should be taken with a pinch of salt as it is often followed by a market downturn. Understanding this can help investors navigate the market upswings and downswings more effectively and make more informed investment decisions.
Not surprisingly, after enjoying strong returns over the past couple of years, the Indian stock market has been grappling with heavy selling pressure in recent months due to relentless foreign capital outflows.
The Indian economy and corporate earnings were already showing signs of weakness but global uncertainties added to the woes. US President Donald Trump announced fresh tariffs on trade partners and thereafter some countries announced retaliatory tariffs on US goods & services.
For India, the Trump administration has announced a steep reciprocal tariff of 26%. This is expected to impact companies in export-driven sectors such as Auto & Ancillaries, Pharma, IT, Engineering, and Gems & Jewellery. Reports suggest that India is mulling slashing tariffs on US imports to soften the blow, though there has been no announcement yet.
The tariff threats and the potential retaliatory measures by some countries have fueled fears of a possible trade war that could slow down global economic growth and cause resurgence in inflation. This in turn has resulted in market corrections.
Why investors should prefer Large Cap Funds (Bluechip Funds) now?
Unlike the past couple of years, the large-cap segment has fared better than the mid-cap and small-cap segment in 2025 so far. The BSE Sensex has lost 6.4% in value, dropping 5,000 points. Meanwhile, the BSE Midcap index and BSE Smallcap index underperformed having crashed 15.8% and 20.3%, respectively on a year-to-date basis.
While market consolidation will likely persist in the near term due to weak global cues, large-cap stocks (also known as bluechip stocks) are expected to deliver better risk-adjusted returns compared to mid and small caps in the current calendar years.
This can be attributed to the fact that amid sustained selling by foreign investors, valuations in the large-cap segment now appear to be attractively placed. Meanwhile, pockets over stretched valuations still exist in the mid and small-cap segment despite the recent corrections.
The Nifty 50 PE is currently around 21x, trading below its long-term average of around 24.8x, suggesting reasonable margin of safety. On other hand, the BSE Smallcap to Sensex ratio is currently near 0.61, much higher than the long-term median of 0.47, indicating high premium.
It is worth noting that during periods of heightened market volatility, large-cap stocks tend to provide greater stability and lower downside risk compared to mid and small-cap stocks. Bluechip stocks are also likely to attract foreign inflows once the market sentiment shifts, giving them room for significant upside. The relatively lower risk profile of large-cap stocks makes Large Cap Funds (Bluechip Funds) a reliable choice for long-term investors seeking resilient growth.
Which are the top performing Bluechip Funds to watch out in FY 2025-26?
#1 Nippon India Large Cap Fund
Launched in August 2007, Nippon India Large Cap Fund has proved its ability to leverage market rallies, allowing it to generate reasonable alpha and navigate complete market cycles effectively. Rather than chasing market trends, the fund seeks out high-growth opportunities within large caps along with strategic exposure to mid and small caps.
On a rolling returns basis in the last 5 years, Nippon India Large Cap Fund has gained 21.5%, compared to category average return of 18.2%, and 18.3% returns in the benchmark BSE 100 – TRI.
Table 1: Nippon India Large Cap Fund 5-year performance
Data as of April 04, 2025
Returns are on a rolling return basis in CAGR (%). Direct Plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN Research)
As of February 28, 2025, Nippon India Large Cap Fund has allocated 83.2% of its assets in large caps, 11.2% in mid caps, 4% in small caps, and the balance in cash.
Its top stock holdings comprise HDFC Bank, Reliance Industries, ICICI Bank, Axis Bank, and Bajaj Finance.
#2 ICICI Pru Bluechip Fund
Launched in May 2008, ICICI Prudential Bluechip Fund boasts a track record of demonstrating consistent performance and delivering robust returns over the long run. The fund’s approach involves identifying high-growth potential stocks without any sector bias available at reasonable valuations.
On a rolling returns basis in the last 5 years, ICICI Pru Bluechip Fund has gained 20.7%, compared to category average return of 18.2%, and 17.6% returns in the benchmark Nifty 100 – TRI.
Table 2: ICICI Pru Bluechip Fund 5-year performance
| Scheme Name | Returns (%) | Category Returns (%) | Benchmark Returns (%) |
| ICICI Pru Bluechip Fund | 20.69 | 18.24 | 17.64 |
As of February 28, 2025, ICICI Pru Bluechip Fund has allocated 85% of its assets in large caps, 6.2% in mid caps, and just 0.66% in small caps, with the balance in cash.
The fund carries predominant exposure in HDFC Bank, ICICI Bank, L&T, Reliance Industries, and Bharti Airtel, among others
#3 Canara Robeco Bluechip Equity Fund
Launched in August 2010, Canara Robeco Bluechip Equity Fund is a prudently managed Large Cap Fund that has a past track record of performing consistently well across various market phases. The fund follows a blend style of investing i.e. it looks for high-growth stocks available at fair valuation and stays invested for a long term.
On a rolling returns basis in the last 5 years, Canara Robeco Bluechip Fund has gained 20.1%, compared to category average return of 18.2%, and 18.3% returns in the benchmark BSE 100 – TRI.
Table 3: Canara Robeco Bluechip Equity Fund 5-year performance
| Scheme Name | Returns (%) | Category Returns (%) | Benchmark Returns (%) |
| Canara Rob Bluechip Equity Fund | 20.11 | 18.24 | 18.34 |
Data as of April 04, 2025
Returns are on a rolling return basis in CAGR (%). Direct Plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN Research)
As of February 28, 2025, Canara Robeco Bluechip Fund has allocated 88% of its assets in large caps, and 7.7% in mid caps, holding no exposure in small caps, with the balance in cash.
The fund has higher exposure in HDFC Bank, ICICI Bank, Infosys, Reliance Industries, and Bharti Airtel.
#4 Baroda BNP Paribas Large Cap Fund
Launched in September 2004, Baroda BNP Paribas Large Cap Fund has managed to outperform the benchmark Nifty 100 – TRI and the category average on multiple occasions. Its focus on picking large-cap stocks having healthy balance sheets along with strategic exposure to mid caps by following the investment philosophy of ‘Growth at a Reasonable Price.
On a rolling returns basis in the last 5 years, Baroda BNP Paribas Large Cap Fund has gained 20%, compared to category average return of 18.2%, and 17.6% returns in the benchmark Nifty 100 – TRI.
Table 4: Baroda BNP Paribas Large Cap Fund 5-year performance
| Scheme Name | Returns (%) | Category Returns (%) | Benchmark Returns (%) |
| Baroda BNP Paribas Large Cap Fund | 20.04 | 18.24 | 17.64 |
Data as of April 04, 2025
Returns are on a rolling return basis in CAGR (%). Direct Plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN Research)
As of February 28, 2025, Baroda BNP Paribas Large Cap Fund has allocated 82.1% of its assets in large caps, 9.2% in mid caps, and the balance in cash.
The fund’s top exposure is skewed towards HDFC Bank, ICICI Bank, Reliance Industries, TCS, and Kotak Mahindra Bank.
#5 Invesco India Largecap Fund
Launched in August 2009, Invesco India Largecap Fund has established a track record of outpacing the benchmark and the category average by a notable margin on multiple occasions in the past. The fund prefers investing in growth-oriented stocks in the large-cap segment, with some exposure to value opportunities.
On a rolling returns basis in the last 5 years, Invesco India Largecap Fund has gained 19.9%, compared to category average return of 18.2%, and 17.6% returns in the benchmark Nifty 100 – TRI.
Table 5: Invesco India Large Cap Fund 5-year performance
| Scheme Name | Returns (%) | Category Returns (%) | Benchmark Returns (%) |
| Invesco India Largecap Fund | 19.87 | 18.24 | 17.64 |
Data as of April 04, 2025
Returns are on a rolling return basis in CAGR (%). Direct Plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN Research)
As of February 28, 2025, Invesco India Largecap Fund has allocated 84.5% of its assets in large caps, 9.2% in mid caps, 5.9% in small caps, and the balance in cash.
The fund is bullish on large-cap heavyweights such as HDFC Bank, ICICI Bank, Infosys, Bharti Airtel, and Reliance Industries.
To Conclude…
Unlike the last few years, the risk-reward balance appears to be shifting in favour of Large Cap Funds. These funds comprise well-established companies that can offer steady returns over the long run. As such, even though Large Cap Funds’ ability to generate extraordinarily high returns may be limited, they can offer better protection against downside risk compared to Mid Cap Funds and Small Cap Funds, thereby rewarding investors with satisfactory gains over the long run.
That said, Large Cap Fund investments are not without risk; they too are prone to market fluctuations. Thus, one should have a long-term investment horizon of at least 3-5 years when investing in Large Cap Funds.
While market corrections can make investors anxious, one should note that it allows fund managers an opportunity to pick stocks with healthy long-term prospects. Therefore, investors can continue to allocate in Bluechip mutual funds via SIP or by investing lump sum in a staggered manner with a long-term perspective.
When investing, remember that performance is not an indicator for future returns and therefore, investors should carefully select schemes that consistently fare well on qualitative and quantitative parameters.
Disclaimer
This article first appeared on PersonalFN here.
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