Best Large Cap Mutual Funds Based On 5 Year Sip Return October 2024

_{Published on: 02 Nov, 2024 14:09}

• Nippon India Large Cap Fund: Leading with a 5-year XIRR of 26.31% and a strong Sharpe Ratio of 1.18, moderate volatility.
• ICICI Prudential Bluechip Fund: 5-year XIRR of 23.78%, low standard deviation at 11.29%, suitable for conservative investors.
• HDFC Top 100 Fund: 5-year XIRR at 23.02%, with low max drawdown of -6.79%, appealing for stability-focused investors.
• Invesco India Largecap Fund: 5-year XIRR of 22.63%, higher risk with max drawdown -14.38%, fits growth-seeking investors.
• JM Large Cap Fund: Balanced 5-year XIRR of 22.41%, moderate risk profile with max drawdown at -10.73%.

 

Large-cap funds provide an attractive investment option for individuals looking for stable returns with lower volatility than mid- or small-cap funds. This analysis identifies the top-performing large-cap funds based on their 5-year XIRR, emphasizing funds that offer consistent returns and sound risk management. This combination of high returns and lower risk makes Large-cap funds ideal for investors seeking to build wealth over the long term.

The 5-year XIRR (Extended Internal Rate of Return) provides insight into a fund’s long-term performance, capturing how well it has navigated different market cycles. For Large-cap funds, a strong 5-year XIRR is a promising indicator, especially as these funds tend to focus on financially stable, well-established companies. Let’s dive into the top Large-cap funds based on this metric.

• 5-Year XIRR: 26.31%
• Sharpe Ratio: 1.18
• Standard Deviation: 12.32%
• Max Drawdown: -7.75%

Nippon India Large Cap Fund stands out with a 5-year XIRR of 26.31%, the highest among its peers. The Sharpe Ratio of 1.18 suggests a good balance between risk and return, indicating efficient risk-adjusted performance. The fund’s standard deviation of 12.32% reflects moderate volatility, and its max drawdown of -7.75% points to resilience in down markets. This fund is ideal for investors looking to maximize growth while maintaining a moderate risk profile.

• 5-Year XIRR: 23.78%
• Sharpe Ratio: 1.11
• Standard Deviation: 11.29%
• Max Drawdown: -8.34%

ICICI Prudential Bluechip Fund offers a 5-year XIRR of 23.78% along with a solid Sharpe Ratio of 1.11, demonstrating its ability to deliver consistent risk-adjusted returns. With a relatively low standard deviation of 11.29%, this fund has lower volatility than most, and a max drawdown of -8.34% suggests controlled losses. This fund is suitable for conservative investors who prioritize stability along with growth.

• 5-Year XIRR: 23.02%
• Sharpe Ratio: 1.04
• Standard Deviation: 12.05%
• Max Drawdown: -6.79%

HDFC Top 100 Fund has delivered a strong 5-year XIRR of 23.02%, backed by a Sharpe Ratio of 1.04. This ratio indicates moderate efficiency in managing risk. With a standard deviation of 12.05%, the fund shows moderate volatility, while its max drawdown of -6.79% highlights its stability during market corrections. This fund appeals to conservative investors who seek reliable returns without high risk.

• 5-Year XIRR: 22.63%
• Sharpe Ratio: 0.74
• Standard Deviation: 12.96%
• Max Drawdown: -14.38%

Invesco India Largecap Fund’s 5-year XIRR of 22.63% places it among the top funds in the large-cap category. Despite a lower Sharpe Ratio of 0.74, which indicates lower risk-adjusted returns, its 12.96% standard deviation and max drawdown of -14.38% highlight moderate volatility. This fund may suit aggressive investors who prioritize returns over risk management.

• 5-Year XIRR: 22.41%
• Sharpe Ratio: 0.97
• Standard Deviation: 12.44%
• Max Drawdown: -10.73%

With a 5-year XIRR of 22.41%, JM Large Cap Fund presents a balanced profile for those seeking long-term growth. Its Sharpe Ratio of 0.97 and standard deviation of 12.44% indicate that it maintains moderate volatility. The fund’s max drawdown of -10.73% makes it a viable option for moderately conservative investors looking for growth with controlled risk.

To offer a comprehensive evaluation, it’s essential to examine key risk metrics along with returns. Here’s a breakdown of some metrics used to evaluate Large Cap funds:

1. Sharpe Ratio: This ratio measures risk-adjusted returns, helping investors understand if the fund's returns justify the risk taken. Higher Sharpe Ratios, like those of Nippon India Large Cap (1.18) and ICICI Prudential Bluechip (1.11), indicate better compensation for risk.

2. Standard Deviation: Reflects the fund’s volatility. Lower standard deviations suggest more stable performance, which is desirable for conservative investors. ICICI Prudential Bluechip Fund, with a standard deviation of 11.29%, is one of the more stable options.

3. Max Drawdown: Shows the largest loss from a peak to a trough, highlighting the fund’s worst-case performance. Funds with lower max drawdowns, like HDFC Top 100 Fund (-6.79%) and Nippon India Large Cap (-7.75%), are generally more resilient during market downturns.

4. Value at Risk (VaR): VaR estimates the potential loss under adverse market conditions. For example, Invesco India Largecap Fund has a VaR of -14.03%, signaling potential losses in extreme market situations, while HDFC Top 100 Fund has a lower VaR at -14.29%, indicating a more conservative risk profile.

Risk-Return Balance

Among the top funds, Nippon India Large Cap and ICICI Prudential Bluechip stand out for their high Sharpe Ratios, offering efficient returns relative to risk. Meanwhile, funds like Invesco India Largecap and JM Large Cap exhibit moderate volatility, with slightly lower risk-adjusted returns, making them suitable for investors with a balanced risk appetite.

Volatility and Stability

When it comes to minimizing volatility, ICICI Prudential Bluechip and HDFC Top 100 funds are more stable options, given their relatively low standard deviations. These funds can appeal to conservative investors looking to avoid high fluctuations. On the other hand, DSP Top 100 Equity Fund, with a standard deviation of 12.82%, offers a moderate approach to risk and return, striking a balance for investors seeking stability with some growth potential.

Long-Term Potential

The 5-year XIRR metric is a key indicator for identifying long-term potential. Nippon India Large Cap and ICICI Prudential Bluechip Fund demonstrate strong historical performance, with steady growth over five years, which can be appealing for investors focused on wealth creation.

When selecting a Large Cap fund, it’s important to balance growth potential with risk tolerance. For aggressive investors, Nippon India Large Cap Fund offers high returns with moderate risk, while ICICI Prudential Bluechip Fund provides a mix of stability and growth, appealing to moderately conservative investors.

Each of these top Large Cap funds has been assessed on both performance and risk management, providing a range of options to suit different investor profiles. By considering both 5-year XIRR and risk metrics, investors can make informed choices aligned with their financial objectives.