May 25, 2024

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3 Largecap / Index Mutual Funds Where Suresh KP is investing in 2024

7 min read

If you are an investor looking for stable returns and cannot bear the high volatility, you should consider large cap funds / index mutual funds. While Large cap funds generate 12% to 15% annualised returns, Index Funds on other hand, historically generated 10% annualised returns. In this article, I would talk about 3 Large Cap and Nifty Index Fund which I am (Suresh KP) investing in 2024. I would also provide some FAQs in case you still want to follow my portfolio.

What are Large Cap Mutual Funds?
Large-cap funds are mutual funds that primarily invest in stocks of large-cap companies. These companies are typically considered to be among the top 100 companies in terms of market capitalization, but this can vary slightly based on market conditions and other factors. These companies are often well-established, have a proven track record, and are generally considered to be less volatile compared to mid-cap or small-cap companies.
In simple terms, large cap funds invest in consistent performing large cap stocks 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 dividend payments. These funds often track a benchmark index like the Nifty 50 or Nifty 100 and aim to replicate its performance.
What are Nifty50 index Mutual Funds?
Nifty50 index mutual funds are mutual funds that aim to replicate the performance of the Nifty50 index. The Nifty50 is one of the leading stock market indices in India, maintained by the National Stock Exchange (NSE). It consists of the 50 largest and most actively traded stocks listed on the NSE, spanning various sectors of the economy.
Nifty50 index mutual funds invest in the same stocks that constitute the Nifty50 index in the same proportion as their weightage in the index. The objective is to closely mirror the performance of the Nifty50 index.

How did I filter these funds for my investment planning?

Financial Goal – My goal is to create wealth that can generate 12% to 15% annualised returns in long term of over 10 years, which can be used for my retirement planning.
Tenure – 10+ years
Risk Appetite – Moderate to High Risk. However, want to avoid very high risk as part of this set of large cap investments while I have a separate portfolio of midcap and smallcap funds.

3 Largecap / Index Mutual Funds Where Suresh KP is investing in 2024
Here is the list of 3 funds where I am investing now.
#1 – UTI Nifty Index Mutual Fund
#2 – Nippon India Large Cap Fund
#3 – HDFC Top 100 Fund
3 Largecap / Index Mutual Funds Where Suresh KP is investing in 2024  – Deep Dive into these funds
Now let us deep dive into these mutual fund schemes about their investment strategy, performance and why I chose these funds for investments.
#1 – UTI Nifty Index Mutual Fund
Investment Strategy:
The scheme seeks to invest in stocks of companies comprising Nifty 50 Index and endeavor to achieve a return equivalent to Nifty 50 Index by passive investment.
Absolute Returns:

1 Year Returns – 21.6%
2 Year Returns – 38.5%
3 Year Returns – 51.9%
5 Year Returns – 104.7%
10 Year Returns – 254% (1 Lakh turned to Rs 3.54 Lakhs)

Annualised Returns:

1 Year Returns – 21.6%
2 Year Returns – 17.6%
3 Year Returns – 14.9%
5 Year Returns – 15.4%
10 Year Returns – 13.4%

Why I am investing in this fund?

This index fund invests 100% in Nifty-50 stocks
Out of its equity portfolio, currently it invests 81.5% in large cap, 3.2% in midcap and balance on other stocks.
As part of equity portfolio, its top-10 stocks are an HDFC Bank, Reliance Industries, ICICI Bank, Infosys, L&T, TCS, ITC, Bharti Airtel, Axis Bank and SBI.
With 0.21% expense ratio for direct plans and Beta of 0.99 (ideally it should be 1 as it replicates index), this fund generated 13.1% annualised returns since inception which is double the returns compared to bank fixed deposits.
Index Funds replicate a particular index and provide stable returns in the medium to long term. Historically, Nifty 50 has generated over 10% annualised returns. Moderate to high risk investors who are willing to invest for medium to long term can invest in such index funds.
In fact you can select any index fund that has a low expense ratio and low tracking error. Just ensure the fund has some historical performance to check for any tracking errors.

#2 – Nippon India Large Cap Fund
Investment Strategy:
The scheme seeks to generate long term capital appreciation by investing predominantly in equity and equity related instruments of large cap companies.
Absolute Returns:

1 Year Returns – 37.6%
2 Year Returns – 69.1%
3 Year Returns – 94.8%
5 Year Returns – 140.9%
10 Year Returns – 418.7% (1 Lakh turned to Rs 5.18 Lakhs)

Annualised Returns:

1 Year Returns – 37.6%
2 Year Returns – 30.0%
3 Year Returns – 24.8%
5 Year Returns – 19.2%
10 Year Returns – 17.8%

Our View about the fund:

This fund is a large cap fund that invests 98% in equity stocks and balance in TREPS.
Out of its equity portfolio, it invests 66% in large cap, 13% in midcap and balance on other stocks.
As part of equity portfolio, this fund invests in HDFC Bank, Reliance, ICICI Bank, SBI, ITC, Axis Bank, L&T, Infosys, Tata Power and Bajaj Finance.
With 0.83% expense ratio for direct plans and Beta of 0.74, this fund generated 16.95% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years, 5 years and 10 years time frame and it was among the 10 large cap mutual funds offered maximum returns in the last 5 years.
Large cap funds provide stable returns and comes with moderate to high risk. If you are moderate-to-high risk appetite investor and willing to invest for over 5 years and expect 12% to 15% annualised returns (though not guaranteed), you can invest in such funds.

#3 – HDFC Top 100 Fund
Investment Strategy:
The scheme seeks to provide long-term capital appreciation/income by investing predominantly in Large-Cap companies.
Absolute Returns:

1 Year Returns – 32.7%
2 Year Returns – 57.0%
3 Year Returns – 76.4%
5 Year Returns – 117.8%
10 Year Returns – 309.6% (1 Lakh turned to Rs 4.09 Lakhs)

Annualised Returns:

1 Year Returns – 32.7%
2 Year Returns – 25.2%
3 Year Returns – 20.7%
5 Year Returns – 16.8%
10 Year Returns – 15.1%

Our View about the fund:

This fund is a large cap fund that invests 98% in equity stocks and balance in TREPS.
Out of its equity portfolio, it invests 80% in large cap, 5.5% in midcap and balance on other stocks.
As part of equity portfolio, this fund invests in HDFC Bank, Reliance, ICICI Bank, NTPC, L&T, Bhari Airtel, Infosys, ITC, Axis Bank and Coal India.
With 1.05% expense ratio for direct plans and Beta of 0.95, this fund generated 14.8% annualised returns since inception.
This fund has outperformed the benchmark in 1 year, 3 years, 5 years and 10 years time frame.
As indicated earlier, Large cap funds provide stable returns and comes with moderate to high risk. If you are moderate-to-high risk taking investor and willing to invest for over 5 years, you can invest in such funds.

FAQs about these large cap and index funds?
#1 – Can investors replicate my portfolio?
It depends on your need. Every individual have their financial goal and any investments should be aligned towards such goals. If your financial goals, tenure and risk appetite aligned towards my goals, yes, you can replicate my portfolio.
#2 – Are these the only 3 top performing mutual funds?
No. There are hundreds of Best Mutual Funds for next 10 years or 5 years. My portfolio (along with my spouse) consists of 8-10 funds and I cannot have all of them under this category. Hence, I picked-up 2-3 funds from large cap / index category.
#3 – Would I stick to these funds for next 10 years?
I can’t say. Like I indicated earlier, I frequently review my portfolio and if something fishy, I would review and exit them. I was investing in Axis Blue Chip Fund earlier, and after I analysed and wrote Worst Performing Axis Mutual Fund’s article, I exited them. Regarding Index Fund, I keep booking profit as and when it reaches new high and re-invest through STP again for next 9-10 months. In net summary, please review your portfolio periodically and make changes if required.
#4 – Would I communicate to investors when I exit these funds?
May or may not be. Like I indicated earlier, I keep reviewing and making modifications (if any) to my mutual fund’s portfolio. In future, if there an updated article on same subject, I may indicate my latest mutual fund portfolio.
#5 – Are these high return mutual funds?
High return can be generated only if one takes high risk. These large cap funds are for moderate to high risk takers and provide stable returns between 12% to 15% (though not guaranteed). Recently we wrote about Low Risk-High Return Mutual Funds as per Value Research which you can review first. If you are aiming for high return funds, consider taking risks and go for midcap and smallcap mutual funds.
#6 – How I am maximizing the returns from these large cap funds or index funds?
Since stock markets have been volatile in the last 3 years, I am continuing my old strategy:

Continue my monthly SIPs during 1st week of the month
In case of lumpsum investments, Invest money in liquid fund and do STP to these mutual funds through Systematic Transfer Plan (STP) for next 6-9 months. I use Kuvera platform and it is simple to do that in few clicks.

#7 – If there are better funds in this category, why you have chosen only these funds?
My motto is not only for higher returns, but stable returns in medium to long term. While there are several large cap and index funds, I am investing only in 2-3 funds from these categories. If you think there are better funds from such categories, you can go ahead and invest in such funds.

Suresh KP is the Founder of Myinvestmentideas. He is NISM Certified – Investment Adviser and NISM Certified – Research Analyst. He has been analyzing financial markets in the last 20 years.He can be reached at suresh@myinvestmentideas.com Latest posts by Suresh KP (see all)

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