Large-Cap Mutual Funds in India: Benefits, Risks & How to Invest

Investing in the stock market can be a complex process, mostly for those new to the world of finance. You may have come across a term called ‘Large-cap Mutual Funds’. But what does this mean and why should you consider investing in them? This blog aims to explore Large-cap Mutual Funds, explaining their features, benefits and how they work.

What are Large Cap Mutual Funds? 

Large-cap Mutual Funds are equity funds that invest in companies with large market capitalisations. These are highly-reputed companies known for their stable performance and consistent wealth generation over long periods.

The term 'large-cap' is derived from 'large market capitalisation' with 'cap' short for capitalisation. In India, according to the Securities and Exchange Board of India (SEBI), large-cap companies are ranked in the top 100 in terms of market capitalisation.

List of Top Large-cap Mutual Funds in 2025

Nippon India Large Cap Fund – Growth

Nippon India Large Cap Fund is designed for investors who want to invest in established companies with a strong market presence. The fund focuses on large-cap stocks, which means it invests in the top 100 companies in terms of market capitalisation. A major advantage of this fund is its relatively low expense ratio of 0.74%, which means more of your money stays invested. Over the last five years, it has delivered an impressive annualised return of 25.27%.

ICICI Prudential Bluechip Fund – Growth

ICICI Prudential Bluechip Fund is a popular choice among conservative investors who want steady growth. This fund mainly invests in well-established blue-chip companies like Larsen & Toubro. These companies have a solid reputation and consistent earnings, making them relatively safer investments. The fund offers a good balance between growth and risk, with a slightly higher expense ratio of 1.47%. Despite that, it has shown strong past performance, delivering a five-year annualised return of 24.15%.

HDFC Large Cap Fund – Regular Growth

HDFC Large Cap Fund is aimed at investors seeking long-term capital appreciation with a lower appetite for risk. The fund invests in a mix of high-quality large-cap companies and spreads investments across various sectors. This diversified approach helps reduce risk and provides stable returns over time. Although its performance has been moderate compared to some peers, it still offers consistency. This fund is a good fit for those who want a slow but steady wealth-building strategy without taking too much risk.

SBI Bluechip Fund – Growth

SBI Bluechip Fund is one of the most trusted and widely held large-cap mutual funds in India. It focuses on investing in well-established companies with a proven track record. The fund’s portfolio is well-balanced across sectors, providing diversification that protects against market volatility. With a competitive expense ratio of 0.82%, the fund is cost-effective for long-term investors. Over the past five years, it has delivered an annualised return of 16.84%. 

Why invest in Large-cap Mutual Funds?

Large-cap Mutual Funds are known for investing in financially stable companies with large market capitalisations, offering lower risks and steady returns. These funds not only provide a diversified investment option but also offer tax efficiency and are particularly suited for long-term growth. Let's get to know why large-cap Mutual Funds can be a smart addition to your investment strategy.

• Lower risks: Large-cap Mutual Funds invest in financially strong companies, making them less likely to be affected by market volatilities compared to mid-cap or small-cap funds.
• Steady returns: These funds are known for providing stable but lower returns compared to more volatile equity funds.
• Diversification: Large-cap Mutual Funds offer diversification within your investment portfolio, which can be vital in managing risks.
• Tax efficiency: Being equity funds, large-cap Mutual Funds are subject to capital gains tax, which is usually more favourable compared to the taxation on income from Fixed Deposits or Savings Accounts.
• Long-term growth: These funds are suited for long-term growth, making them an ideal choice for investors looking to build wealth over time.

Key features of Large-cap Mutual Funds

Large-cap Mutual Funds are known for offering stability and reliability, primarily investing in blue-chip stocks known for their market flexibility. Offering benefits like regular dividends, suitability for long-term financial goals and high liquidity, large-cap Mutual Funds are a wise choice for investors seeking a balanced approach to wealth creation. Let's explore the key features of large-cap Mutual Funds:

• Stability: Large-cap Mutual Funds are less likely to be affected by market fluctuations, offering more stability compared to other equity funds.
• Dividends: Many large-cap Mutual Funds provide regular dividends, thus making it ideal for those seeking a steady income stream.
• Suitable for long-term goals: These funds are suitable for long-term financial goals like retirement planning, etc.
• Investment in blue-chip stocks: Large-cap funds invest in blue-chip stocks, which are stocks of well-established companies with a good track record.
• High liquidity: The stocks of large-cap companies are frequently traded, providing high liquidity to the investors

How do Large-cap Mutual Funds work?

Large-cap Mutual Funds pool money from various investors to purchase a diversified portfolio of large-cap (blue-chip) stocks. These funds are managed by professional fund managers who allocate assets to optimise returns while balancing the risks. The performance of these funds is often benchmarked against a market index like the S&P BSE 100.

How to invest in Large-cap Mutual Funds?

Whether you prefer direct investment, an online platform, professional guidance or a systematic approach, there are multiple options to explore. Here's a brief overview of the methods you can use to start investing in Large-cap Mutual Funds:

• Direct investment: nvestors can directly invest in these funds through asset management companies.
• Online platforms: Various online platforms provide easy access to Mutual Fund investments, including large-cap funds.
• Financial advisors: Investors can also seek advice from financial advisors for tailored investment strategies.
• Systematic Investment Plans (SIPs): SIPs allow investors to invest a fixed amount regularly, making it a disciplined approach to investing

Who should invest in Large Cap Mutual Funds? 

Large-cap Mutual Funds are best suited for the following:

• Long-term investors: Those with an investment horizon of 5-7 years or more.
• Risk-averse investors: Individuals who prefer stability and lower risk in their equity investments.
• Retirement planning: Investors looking for reliable growth for their retirement corpus.

Risks and returns

While Large-cap Mutual Funds are safer than mid-cap and small-cap funds, they are not entirely risk-free. Market conditions can still affect the fund's performance but to a lesser extent. It's essential to understand these risks and align them with your risk tolerance.

Tax implications

Understanding the tax implications is an important aspect of investing in Large-cap Mutual Funds, as it directly affects your returns. In India, such investments are subject to specific tax rules, including Short-Term Capital Gains Tax, Long-Term Capital Gains Tax and Dividend Distribution Tax. Let's understand how they impact your investments in Large-cap Mutual Funds, enhancing your financial planning and decision-making process.

• Short-Term Capital Gains Tax (STCG): For units sold within a year, gains are taxed at the rate of 15%.
• Long-Term Capital Gains Tax (LTCG): For units held for more than a year, gains are taxed at the rate of 10% on the returns that are over Rs 1 lakh without indexation benefits.
• Dividend Distribution Tax (DDT): DDT is deducted by fund houses before distributing dividends to investors.

Large-cap Mutual Funds offer a mix of stability, potential for growth and lower risk, making them an attractive investment option for many. They are suitable for investors with a long-term perspective and a conservative risk appetite. However, like any investment, it's important to do thorough research and consider your financial goals and risk tolerance before investing.
By understanding the basics of Large-cap Mutual Funds, you can make informed decisions and find a valuable addition to your investment portfolio.