Best Large Cap Mutual Funds to Invest in October 2024

Many mutual fund advisors have recommended investing in large cap schemes in the coming year. They believe that the large cap category can do well as the market is entering expensive territory. These advisors say the stock market is at an all-time high and is likely to become volatile. Therefore, if you are a conservative investor and looking to invest in relatively safer equity mutual fund schemes to achieve your long-term goals, you should consider investing in large cap mutual funds. However, before that you should familiarize yourself with what large cap companies are. mutual funds and the prevailing conditions in the stock market.

As per Sebi’s mandate, large cap mutual funds are mandated to invest in the top 100 companies by market capitalization. Large companies do better in a volatile market as they can be market leaders and resilient to crises. That is why if you are looking for a relatively safer category of mutual funds, you should consider investing in large cap funds.

Volatile times ahead

Many stock investors are concerned about increasing market volatility and uncertainties. A rising market, higher interest rates and inflation are disconcerting. The relative stability of the Indian economy and better fundamentals are supporting the market. However, one cannot be completely safe from the global scenario. This is why advisors are asking investors to proceed with caution.

Many mutual fund investors and analysts believe that large cap schemes are losing their appeal of late. Since SEBI introduced total return index in 2018 and stricter investment norms, large cap schemes have been struggling to beat their benchmarks. However, completely canceling large cap schemes could be a mistake. It is true that new benchmarks and stricter investment rules have made life difficult for these plans. However, large cap schemes can still continue to offer inflation-beating returns without much volatility.

Investing in other categories of mutual funds to earn higher returns without paying attention to the additional risk could be a costly mistake for investors. If you are happy with the 10-12% returns offered by large cap mutual funds over a long period, you should invest in them. If you want to match the market returns, you can educate yourself about index schemes and invest in a large cap index scheme.

If you are interested in investing in large cap mutual funds to meet your long-term financial goals, here are our recommended large cap schemes for September 2024. You can invest in these schemes with a minimum investment horizon of five to seven years . Stay tuned for our monthly updates where we continue to analyze the performance of these schemes. We typically present our updates in the first or second week of each month.

Best Large Cap Mutual Funds to Invest in October 2024:

Here are this month’s updates. BNP Paribas Large Cap Fund has been in the first quartile for the last eight months. Axis Bluechip Fund has been in the fourth quartile for the last seven months. Canara Robeco Bluechip Equity Fund has been in the third quartile for the last eight months. Mirae Asset Large Cap Fund has been in the fourth quartile for 12 months.

Many investors have been asking about the poor performance of the Axis Bluechip Fund in the last 12 months and whether they should continue investing in the scheme. We believe that equity mutual funds should be judged by their long-term performance. The scheme has outperformed its benchmark and category seven times in the last 10 years. That’s a great record. Sure, the scheme has underperformed its benchmark and category over the past three years. If you are worried, you can choose another large cap plan. If you want to give it more time, you can continue investing in the plan. Mutual fund analysts believe that schemes that have been following the growth strategy have performed poorly in recent years as the value strategy has gained prominence in the market.

Here is our methodology:

ETMutualFunds has employed the following parameters to shortlist the equity mutual fund schemes.
1. Average rolling returns: Shot daily for the last three years.

2. Consistency in the last three years: The Hurst exponent, H, is used to calculate the coherence of a background. The H exponent is a measure of the randomness of a fund’s NAV series. Funds with high H tend to exhibit low volatility compared to funds with low H.

i) When H = 0.5, the return series is said to be a geometric Brownian time series. This type of time series is difficult to forecast.

ii) When H is less than 0.5, the series is said to be mean-reverting.

iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger the trend of the series.

3. Risk of falling: For this measure we have only considered the negative returns provided by the mutual fund system.
X =Returns below zero

Y = Sum of all squares of X

Z = Y/number of days needed to calculate the relationship

Downside Risk = Square Root of Z

4. Superior performance: It is measured by Jensen’s Alpha over the last three years. Jensen’s Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). A higher alpha indicates that the portfolio’s performance has exceeded the market’s expected returns.

Average return generated by the MF Scheme =[RiskFreeRate+BetaoftheMFScheme*{(Averagereturnoftheindex-RiskFreeRate}[RiskFreeRate+BetaoftheMFScheme*{(Averagereturnoftheindex-RiskFreeRate}[Tasalibrederiesgo+BetadelEsquemaMF*{(Rendimientopromediodelíndice-Tasalibrederiesgo}[RiskFreeRate+BetaoftheMFScheme*{(Averagereturnoftheindex-RiskFreeRate}

5. Size of assets: For equity funds, the threshold asset size is Rs 50 crore.

(Disclaimer: Past performance is no guarantee of future performance.)