Best Large Cap Mutual Funds - Benefits, Who Should Invest & How does It Work?
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Large Cap Mutual Funds are investments in equity that allocate a greater percentage of overall assets to market capitalisation to businesses. These well-known businesses have a proven track record of providing investors with substantial returns over an extended period of time. Thus, large-cap mutual funds are renowned for producing consistent wealth accumulation.

For individuals with a long investing horizon and a somewhat lower risk threshold, they are a smart option. As a result, investing in these avenues is seen as dependable and less risky.

What Are Large Cap Mutual Funds?

The kind of equity funds known as Large Cap Mutual Funds allocate a significant amount of the managed assets to equity shares of businesses with high market capitalisations. In addition, Blue-chip firms are well-known for having a solid market reputation.

The best way to create variety across market capitalisations is to invest in large-cap companies. They invest in specialised businesses in several industries; thus, diversification is a given for the portfolio. Furthermore, investors are not required to track every sector or make investments in every one of them. 

According to criteria set forth by the Securities and Exchange Board of India (SEBI), large-cap mutual funds are required to allocate a minimum of 80% of their assets to equity stakes in each of the top 100 high-market capitalisation corporations.

Large-cap mutual funds, with their strategically located companies, sound operations, cautious business plans, and continuous revenue creation, provide investors with moderately risky, high liquidity, investment alternatives (including lump-sum and SIP), stability, and stable capital appreciation in India. They also offer consistency and sustained capital growth. 

Who Should Invest in Large Cap Mutual Funds?

As large-cap mutual funds are based on well-established, reliable corporations, they are perfect for investors with low-risk profiles. These funds offer a low-risk portfolio that makes them appropriate for individuals new to investing in mutual funds. They are also appropriate for investors who want to yield assets for a long time, like retirement planning. Individuals who have surplus cash should consider these funds as the returns are comparatively low, so one has to hold them for a period of 3-5 years.

These funds are also recommended for those who want to take advantage of the fluctuations in the market.

Advantages of Large Cap Mutual Funds

The following advantages can be obtained by investors who allocate their savings to the bestlarge-cap mutual funds:

  • Minimal Risk Factor - in comparison to other equity fund categories, large-cap mutual funds are linked to a lower level of risk.
  • Strong Liquidity - units in large-cap funds can be readily redeemed at any moment after purchase. Also, a portion of the investment may be withdrawn.
  • Investment Options - SIP and lump-sum investments are the two ways to invest in large-cap mutual funds. The investor has the final say in the matter.
  • Provides stability - large-cap businesses are typically better equipped to withstand a downturn in the economy. As such, they give investors stability.
  • Stable Capital Growth - these businesses have a solid operational foundation, a sensible business plan, and a track record of reliably generating profits.

Features of Large Cap Mutual Funds

Large-cap mutual fund investments are managed by fund companies, who charge a fee, known as the Expense ratio, as a percentage of the fund’s total assets. The SEBI set a 2.5% expense ratio cap, preventing firms from charging more for portfolio management services.

To maximise returns, it is recommended to find a plan with a lower expenditure ratio. These funds invest in elite businesses, which grow slowly and steadily and are susceptible to market fluctuations.

Top Large Cap Mutual Funds for Investment in India

Fund Name SBI Bluechip Fund Aditya Birla Sun Life Frontline Equity Fund
Fund Size Rs. 39,651 Crore Rs. 23,815 Crore
Annualised Returns 0.1618 0.1533
Sector Exposure Less exposed to Financial and Automobile sectors; More in consumer staples, construction, healthcare Information not provided
Expense Ratio Information not provided 1.01%

1. SBI Bluechip Fund

  • Fund Size: Rs. 39,651 Crore
  • Annualised returns: +16.18%
  • SBI Bluechip fund is less exposed to the Financial and Automobile sectors than other funds in the category, with most of its funds invested in sectors such as consumer staples, construction, and healthcare.

2. Aditya Birla Sun Life Frontline Equity Fund

  • Fund Size: Rs. 23,815 Crore
  • Annualised returns: +15.33%
  • This fund had assets under management (AUM) of Rs. 23,815 Crore. It is a medium-sized fund in its category. With an expenditure ratio of 1.01%, its is more expensive than the majority of other Large Cap Funds.

How Do Large Cap Mutual Funds Work?

The term “large-cap” refers to investment funds that focus mostly on the best 100 Indian firms based on their market capitalisation. It is well-known that the companies enjoy a great reputation in the industry. Large-cap funds are required by law to allocate no less than 80% of their holdings to these 100 companies.

You can be confident that when you invest with large-cap funds, you are supporting businesses with a strong track record of medium- to long-term success. Large-cap funds are less volatile than mid- and small-cap as a result.

Who Should Invest in Large Cap Funds?

Large-cap mutual funds are your best bet if you want to make profits but are a risk-averse investor. These schemes are also recommended to those with an aim to be a part of the top companies of India and those who want to build a core portfolio.

Taxation on Large-Cap Funds

The tax treatment of Large-cap mutual funds is the same as that of other equity holdings. Taxation is based on capital gains, either short-term or long-term.

Short-term capital gains (STCG) are defined as capital gains categorised during a period of possession of less than a year. The tax on these is 15%.

Long-term capital gains, or LTCG, are gains on investments held for longer than a year. The current tax rate states that LTCG is exempt from taxation of up to 1 lakh in a fiscal year. Any amount over this cap is subject to 10% taxation.

How to Invest in Large Cap Funds?

Investing in Large Cap Funds can help your money grow with a lower level of risk. Follow these steps to get started on your path to financial success.

  • Set Clear Goals: Determine your financial objectives and risk tolerance. Large Cap Funds are known for their stability, ideal for long-term goals.
  • KYC Compliance: Complete the KYC process, which requires identity verification. Most investment platforms will guide you through this.
  • Choose a Reputable Platform: Pick a trusted investment platform like a mutual fund company's website or a financial advisor.
  • Research and Select: Evaluate different Large Cap Funds based on historical performance, fund manager expertise, and fees. Choose one that aligns with your goals.
  • Invest: Transfer your desired amount into the chosen fund. You can make a lump-sum investment or set up SIPs for periodic contributions.
  • Monitor: Keep track of your investment's performance. Periodically review your portfolio and make adjustments if necessary.


Choosing the best Large Cap Mutual Fund involves careful consideration of your financial goals and risk tolerance. Kotak Mahindra Bank offers a range of top-performing options that cater to various needs. Investing wisely can lead to substantial wealth creation, and Kotak is here to help you make informed decisions for a secure financial future.

Frequently Asked Questions

1. What is the difference between large-cap and large and mid-cap funds?

Large-cap funds invest in well-established, high-market cap firms, while large and mid-cap funds invest in large and medium-sized companies.

2. Where do Large Cap Mutual Funds invest?

Large-cap mutual funds invest mainly in the equity shares of well-established, high-market capitalisation companies.

3. What returns can one earn from a Large-Cap Mutual Fund?

Returns from large-cap mutual funds vary, but generally, they offer stable and moderate growth.

4. Which large-cap mutual fund is best for 2023?

The best large-cap mutual fund for 2023 depends on individual financial goals and the investor's risk tolerance.

5. Which is best large-cap or mid-cap mutual funds?

Large-cap and mid-cap mutual funds serve different purposes; the choice depends on your financial goals and risk tolerance.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.