What is market capitalization? Which large-cap funds to invest in 2023?

What is Market capitalization?

The market capitalization of a company is the number of outstanding shares of that particular company multiplied by the price of each share. It is an indicator of the size of the company based on its market value.

Market Capitalisation = (Number of shares outstanding) * (Share Price)

Market capitalizations of companies are broadly classified into three types –

	Market Capitalisation	Rank In Country	Example
Large Cap	Greater than Rs 20,000 Cr	Top 100 Companies	Reliance Industries, Infosys
Mid Cap	Greater than Rs 5000 Cr, but less than Rs 20,000 Cr	Rank among 100-250 companies	Castrol India, LIC Housing Finance
Small Cap	Less Than Rs 5000 Cr	Ranked lower than 250	Hathway Cable, Thyrocare Technologies Ltd

Companies with large market capitalizations are typically market leaders in their respective sectors and are considered to be reliable.

These companies also have strong financials which aid in maintaining stability despite market fluctuations and economic conditions/downturns.

These stocks tend to underperform when compared to small-cap and mid-cap companies with respect to returns. However, they also tend to offer low volatility and high stability; and hence are suitable for risk-averse investors.

Funds that invest a large % of their total assets into companies with high/large market capitalization tend to be more stable than others.

These funds are known to often generate a profit for their investors due to the stable performance of their underlying securities.

These funds are suitable for investors looking to invest for a long-term horizon of 5-7 years. These funds stay strong and deliver stable returns despite the economic downturns (bear market) and hence are suitable for investors looking for low-risk options for wealth creation.

Scheme Name	Return 1 Year (%) Direct	Return 3 Year (%) Direct	Return 5 Year (%) Direct	Daily AUM (Cr.)
Canara Robeco Bluechip Equity Fund	57.94	17.75	18.38	2,250.25
Axis Bluechip Fund	46.32	16.55	18.34	25,134.85
Kotak Bluechip Fund	66.70	14.11	15.63	2,392.31
BNP Paribas Large Cap Fund	51.68	14.03	15.11	1,041.16
Mirae Asset Large Cap Fund	61.47	13.77	17.78	23,976.51
UTI Master share Fund	62.35	13.48	15.36	7,823.84

Let us now take a look at 6 large-cap funds that have delivered good returns over the past few years and how they have performed.

1. Canara Robeco Bluechip Equity Fund

Minimum Investment Amount (Lump Sum)	Rs 5000
Minimum SIP Investment Amount	Rs 1000
Expense Ratio	0.58%

Performance

The fund has delivered an annualized return of 17.75% over the last 3 years and has constantly outperformed its benchmark (S&P BSE 100 Total Return Index).

The fund has also outperformed other funds and the category average.

Pros

• The expense ratio is on the lower end
• Fund has higher 1-year, 3-year, and 5-year returns as compared to the category average.

Cons

None

2. Axis Bluechip Fund

Minimum Investment Amount (Lump Sum)	Rs 5000
Minimum SIP Investment Amount	Rs 500
Expense Ratio	0.50%

Performance

The fund has delivered an annualized return of 16.55% over the last 3 years and has constantly outperformed its benchmark (NIFTY 50 Total Return Index). The fund has also outperformed other funds and the category average.

Pros 

• The expense ratio is on the lower end
• Fund has higher 3-year and 5-year returns as compared to the category average.

Cons

• The AUM of the fund is greater than 15,000 Cr. The performance of the fund with respect to the returns stagnates when the fund crosses this AUM threshold.
• Investors should keep an eye on the performance by monitoring the returns of the fund.

3. Kotak Bluechip Fund

Minimum Investment Amount (Lump Sum)	Rs 1000
Minimum SIP Investment Amount	Rs 100
Expense Ratio	0.92%

Performance

The fund has delivered an annualized return of 14.11% over the last 3 years and has constantly outperformed its benchmark (NIFTY 50 Total Return Index). 

Pros

• The expense ratio is on the lower end
• Fund has higher 3-year and 5-year returns as compared to the category average

Cons

None

4. BNP Paribas Large Cap Fund

Minimum Investment Amount (Lump Sum)	Rs 5000
Minimum SIP Investment Amount	Rs 300
Expense Ratio	1.02%

Performance

The fund has delivered an annualized return of 14.03% over the last 3 years and has constantly outperformed its benchmark (NIFTY 50 Total Return Index). 

Pros

• The expense ratio is on the lower end
• Fund has higher 3-year and 5-year returns as compared to the category average.

Cons

None

5. Mirae asset Large Cap Fund

Minimum Investment Amount (Lump Sum)	Rs 5000
Minimum SIP Investment Amount	Rs 1000
Expense Ratio	0.54%

Performance

The fund has delivered an annualized return of 13.77% over the last 3 years and has constantly outperformed its benchmark (NIFTY 100 Total Return Index). 

Pros

• The expense ratio is on the lower end
• Fund has higher 1-year, 3-year, and 5-year returns as compared to the category average.

Cons

• The AUM of the fund is greater than 15,000 Cr. The performance of the fund with respect to the returns stagnates when the fund crosses this AUM threshold.
• Investors should keep an eye on the performance by monitoring the returns of the fund.

6. UTI Master share Fund

Minimum Investment Amount (Lump Sum)	Rs 5000
Minimum SIP Investment Amount	Rs 1000
Expense Ratio	1.02%

Performance

The fund has delivered an annualized return of 13.48% over the last 3 years and has constantly outperformed its benchmark (S&P BSE 100 Total Return Index). 

Pros 

• The expense ratio is on the lower end
• Fund has higher 1-year, 3-year, and 5-year returns as compared to the category average.

Cons

None

Conclusion

Listed above were the best large-cap mutual funds to invest in 2021. You can start investing in them through the EduFund platform by just downloading the app and signing up.

Disclaimer
Mutual fund investments are subject to market risks. The past performance of any fund is no surety of its future performance. Please do your own research on the risks associated.