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Top Large Cap Mutual Funds In India: Should You Be Investing In them Now?
The Sensex and the Nifty have given negative returns since the start of the year. The Sensex which closed at 27,507.54 on Jan 1, 2015 is now trading almost 1700 points lower at 25,800 points. It is down almost 6 per cent since the start of the year.
In line with the markets select large cap funds have also generated poor returns since the start of the year.
HDFC Equity is among the largest equity dedicated mutual funds in the country. It was launched almost 20 years ago and has given a return of almost 20 per cent since launch. In the past one year the returns of the fund has not been particularly good. In fact, in line with the markets it has given a negative return of almost 5 per cent, since the start of the year.
This of course is slightly better than the negative 6 per cent returns that the Sensex has given.
| Returns from HDFC Equity | |
|---|---|
| 1 Year Returns | -3.5 per cent |
| 3 Year Returns | 19.00% |
| 5 Year Returns | 8.83% |
If you look at the above you would realize that mutual funds tend to give better returns over the longer term and the short term returns can be difficult to come by. The fund has a solid portfolio with almost 16 per cent holdings in 2 blue chip stocks like State Bank of India and ICICI Bank.
There are a number of reasons why one can be bullish on HDFC Equity. The first is that the portfolio is heavily skewed in favor of the banking sector. Should an economy recovery happen sooner than expected it would benefit the banking sector. On the other hand expected rate cuts could also benefit the banking sector. This makes HDFC Equity a good bet for long term investors.
If you are investing a lump sum, you might want to wait for the markets to fall another 5 per cent from here, which would bring down the NAV further, making it more attractive.
Birla Sun Life Frontline Equity Fund
The performance of Birla Sun Life, year to date is much better. In fact, the fund has a year to date return of almost 1 per cent as compared to negative 6 per cent for the Nifty.
Returns from Birla Sun Life Frontline Equity
| Returns from Birla Sun Life Frontline Equity | |
|---|---|
| 1 Year Returns | 6.08% |
| 3 Year Returns | 20.00% |
| 5 Year Returns | 11.00% |
The returns from Birla Sun Life is much better than peers on a short term basis. The portfolio comprises stocks like HDFC Bank, ICICI Bank, Infosys etc.
The weightage of banking stocks is not very high and the exposure to a single stock is relatively less. The fund also has a good mix with IT and infrastructure stocks.
Should a sharper recovery in the economy take place HDFC Equity maybe a better bet than Birla Sun Life because of its substantial exposure to economy related stocks.
Reliance Equity Opportunities Fund
Like peers most of the holdings of the fund are in top notch companies from the banking and IT space.
Returns from Reliance Equity Opportunities Fund
| Returns from Reliance Equity Opportunities Fund | |
|---|---|
| 1 Year Returns | 7.27% |
| 3 Year Returns | 22.27% |
| 5 Year Returns | 13.53% |
The returns from Reliance Equity Opportunities Fund has largely been good over the last few years. The portfolio has stocks like State Bank of India, HDFC Bank, Divis Labs and Cummins India. This fund is also a good bet for long term investors considering its solid track record.
Conclusion
While most of the mutual funds have given negative returns since the beginning of the year, Reliance Equity Opportunities Fund stands out. However, if there is an uptick in the economy and interest rate cuts happen rapidly, HDFC Equity could benefit on account of its strong exposure to banking related stocks.
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