There is a common perception about mutual funds that large-cap funds are safe and do not fluctuate much. But recent figures tell a different story. Investors often think that investing money in blue-chip companies will always be profitable, but the reality is that even big stocks are not untouched by market fluctuations.
According to data from the Association of Mutual Funds in India (AMFI), out of 33 large-cap funds, 28 funds could not manage even 5% returns in the last one year. Of these, 10 funds have given negative returns, falling as low as (-) 8.34%. Surprisingly, only 1 large-cap fund has shown double-digit growth – Motilal Oswal Large Cap Fund (19.42%).
This clearly shows how severe the recent market correction has been. It also proves that large-cap funds are not completely risk-free. Yes, indeed, large-cap funds usually provide stability compared to small-cap and mid-cap funds, but this does not mean that there is no possibility of loss in them. Therefore, instead of investing just by looking at the name, do smart research, adopt proper asset allocation, and make decisions keeping in mind the market conditions.
Also read: 5 Top Performing Equity Mutual Funds Amid the Market Correction
Here is the list of 10 worst-performing large-cap funds that have given negative returns — sorted from lowest to highest 1-year return:
1. Quant Large Cap Fund (-8.46%)
2. Bank of India Bluechip Fund (-8.34%)
3. JM Large Cap Fund (-5.93%)
4. ITI Large Cap Fund (-4.11%)
5. Groww Large Cap Fund (-3.36%)
6. Union Largecap Fund (-2.91%)
7. Taurus Large Cap Fund (-2.20%)
8. PGIM India Large Cap Fund (-0.86%)
9. HSBC Large Cap Fund (-0.44%)
10. Sundaram Large Cap Fund (-0.16%)
(Data: AMFI)
Risks and benefits of investing in large-cap funds
Risks:
Low return potential: Large-cap funds do not grow as fast as mid-cap and small-cap can.
Impact of market correction: Although these funds are considered safer, the recent decline makes it clear that large stocks can also come under pressure.
Long investment horizon is important: Large-cap funds are less likely to give quick profits, so it is important to invest in it with patience for a long time.
Advantages:
Low volatility: Large-cap companies are more stable than mid-cap and small-cap, which limits losses during market downturns.
Trusted companies: These funds invest in companies that have a strong business model and a long track record, which increases the chances of good returns in the long run.
Regular growth: Large-cap companies usually give slow but stable returns, which helps in long-term wealth creation.
Also read: SIP Calculator: THIS SBI mutual fund completes 10 years! Rs 10,000 SIP turns into Rs 27.67 lakh
Who should invest in large-cap funds?
Those who want stable returns with low risk.
Investors who want to invest money for the long term (5-7 years or more).
Whose portfolio should be balanced, that is, if they already have investments in midcap or smallcap, then they can add stability with largecap.
What should investors do in a falling market?
Don’t panic, continue SIP: Continue SIP even during market downturns, as it will give you the benefit of rupee cost averaging.
Choose quality funds: Review the holdings and fund management of poorly performing funds instead of blindly abandoning them.
Maintain long-term focus: The market will keep fluctuating, but the real benefit of large-cap funds is realized only when you stay for the long term.
In short, large-cap funds prove to be reliable in the long term despite market fluctuations. Market downturns can be an opportunity to buy good funds at a lower price, but it is important to move ahead with the right fund and strategy.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.
