Mutual funds: Why investing in large cap funds can be beneficial now amid market correction
With the Nifty 50 currently trading at a PE of around 21x, below its long-term average of 24.8x, investors are finding a reasonable margin of safety in large caps.


- Apr 8, 2025,
- Updated Apr 8, 2025 8:08 PM IST
In 2025, large-cap mutual funds — often referred to as bluechip funds — have emerged as a more stable and rewarding investment avenue compared to their mid-cap and small-cap counterparts. Amid global uncertainties, including the Trump administration's imposition of a steep 26% reciprocal tariff on Indian exports, large-cap stocks have demonstrated resilience.
While the BSE Sensex dropped 6.4% year-to-date, mid-cap and small-cap indices declined even further, down 15.8% and 20.3%, respectively. In the past week, large-cap funds experienced a more significant decline of -2.52% compared to small-cap funds, which saw a decrease of -2.16%.
With the Nifty 50 currently trading at a PE of around 21x, below its long-term average of 24.8x, investors are finding a reasonable margin of safety in large caps. In contrast, the high BSE Smallcap to Sensex ratio suggests smaller stocks are relatively expensive, amplifying their downside risk.
In such situations, bluechip mutual funds offer a smart blend of lower volatility, long-term growth, and better risk-adjusted returns, making them an attractive option for cautious investors.
Large-cap mutual funds focus on investing in the stocks of the top 100 companies in India, which have the highest market capitalization. These companies are well-known brands in the country, with many Indians using their products on a daily basis.
The benefits of Large Cap Funds include the opportunity to invest in established companies that are household names. These companies have a loyal customer base and a sustainable business model, leading to consistent profitability. Large Cap Funds are particularly suitable for long-term financial goals that are at least 5 years away.
Top Performing Bluechip Mutual Funds: 5-Year Returns
1. Nippon India Large Cap Fund Launch Date: August 2007
5-Year Return: 21.48%
Category Average: 18.24%
Benchmark (BSE 100 - TRI): 18.34%
Large Cap Exposure: 83.2%
Top Holdings: HDFC Bank, Reliance Industries, ICICI Bank, Axis Bank, Bajaj Finance
Strategy: Focuses on large-cap growth with selective exposure to mid and small caps
Highlights: Demonstrated strong alpha generation and consistent performance across market cycles.
2. ICICI Prudential Bluechip Fund
Launch Date: May 2008
5-Year Return: 20.69%
Category Average: 18.24%
Benchmark (Nifty 100 - TRI): 17.64%
Large Cap Exposure: 85%
Top Holdings: HDFC Bank, ICICI Bank, L&T, Reliance Industries, Bharti Airtel
Strategy: Identifies high-growth potential stocks with no sector bias
Highlights: Offers a disciplined and consistent approach, especially effective during down markets.
3. Canara Robeco Bluechip Equity Fund
Launch Date: August 2010
5-Year Return: 20.11%
Category Average: 18.24%
Benchmark (BSE 100 - TRI): 18.34%
Large Cap Exposure: 88%
Top Holdings: HDFC Bank, ICICI Bank, Infosys, Reliance Industries, Bharti Airtel
Strategy: Long-term investing with a blend of growth and valuation discipline
Highlights: Known for consistent returns and a conservative, quality-driven stock selection.
4. Baroda BNP Paribas Large Cap Fund
Launch Date: September 2004
5-Year Return: 20.04%
Category Average: 18.24%
Benchmark (Nifty 100 - TRI): 17.64%
Large Cap Exposure: 82.1%
Top Holdings: HDFC Bank, ICICI Bank, Reliance Industries, TCS, Kotak Mahindra Bank
Strategy: Follows 'Growth at a Reasonable Price' (GARP) philosophy
Highlights: Balanced mix of fundamentals and growth potential, often outperforming benchmarks.
In an uncertain global environment marked by trade tensions and market corrections, large-cap mutual funds offer a compelling case for investors. Their strong 5-year track records, lower risk, and ability to attract institutional and foreign flows make them well-suited for long-term wealth creation.
In 2025, large-cap mutual funds — often referred to as bluechip funds — have emerged as a more stable and rewarding investment avenue compared to their mid-cap and small-cap counterparts. Amid global uncertainties, including the Trump administration's imposition of a steep 26% reciprocal tariff on Indian exports, large-cap stocks have demonstrated resilience.
While the BSE Sensex dropped 6.4% year-to-date, mid-cap and small-cap indices declined even further, down 15.8% and 20.3%, respectively. In the past week, large-cap funds experienced a more significant decline of -2.52% compared to small-cap funds, which saw a decrease of -2.16%.
With the Nifty 50 currently trading at a PE of around 21x, below its long-term average of 24.8x, investors are finding a reasonable margin of safety in large caps. In contrast, the high BSE Smallcap to Sensex ratio suggests smaller stocks are relatively expensive, amplifying their downside risk.
In such situations, bluechip mutual funds offer a smart blend of lower volatility, long-term growth, and better risk-adjusted returns, making them an attractive option for cautious investors.
Large-cap mutual funds focus on investing in the stocks of the top 100 companies in India, which have the highest market capitalization. These companies are well-known brands in the country, with many Indians using their products on a daily basis.
The benefits of Large Cap Funds include the opportunity to invest in established companies that are household names. These companies have a loyal customer base and a sustainable business model, leading to consistent profitability. Large Cap Funds are particularly suitable for long-term financial goals that are at least 5 years away.
Top Performing Bluechip Mutual Funds: 5-Year Returns
1. Nippon India Large Cap Fund Launch Date: August 2007
5-Year Return: 21.48%
Category Average: 18.24%
Benchmark (BSE 100 - TRI): 18.34%
Large Cap Exposure: 83.2%
Top Holdings: HDFC Bank, Reliance Industries, ICICI Bank, Axis Bank, Bajaj Finance
Strategy: Focuses on large-cap growth with selective exposure to mid and small caps
Highlights: Demonstrated strong alpha generation and consistent performance across market cycles.
2. ICICI Prudential Bluechip Fund
Launch Date: May 2008
5-Year Return: 20.69%
Category Average: 18.24%
Benchmark (Nifty 100 - TRI): 17.64%
Large Cap Exposure: 85%
Top Holdings: HDFC Bank, ICICI Bank, L&T, Reliance Industries, Bharti Airtel
Strategy: Identifies high-growth potential stocks with no sector bias
Highlights: Offers a disciplined and consistent approach, especially effective during down markets.
3. Canara Robeco Bluechip Equity Fund
Launch Date: August 2010
5-Year Return: 20.11%
Category Average: 18.24%
Benchmark (BSE 100 - TRI): 18.34%
Large Cap Exposure: 88%
Top Holdings: HDFC Bank, ICICI Bank, Infosys, Reliance Industries, Bharti Airtel
Strategy: Long-term investing with a blend of growth and valuation discipline
Highlights: Known for consistent returns and a conservative, quality-driven stock selection.
4. Baroda BNP Paribas Large Cap Fund
Launch Date: September 2004
5-Year Return: 20.04%
Category Average: 18.24%
Benchmark (Nifty 100 - TRI): 17.64%
Large Cap Exposure: 82.1%
Top Holdings: HDFC Bank, ICICI Bank, Reliance Industries, TCS, Kotak Mahindra Bank
Strategy: Follows 'Growth at a Reasonable Price' (GARP) philosophy
Highlights: Balanced mix of fundamentals and growth potential, often outperforming benchmarks.
In an uncertain global environment marked by trade tensions and market corrections, large-cap mutual funds offer a compelling case for investors. Their strong 5-year track records, lower risk, and ability to attract institutional and foreign flows make them well-suited for long-term wealth creation.