Unveiling the Best Large Cap Funds of the Past 5 Years

Choosing the right large-cap mutual fund is a crucial decision for investors seeking stable and potentially high returns. This article delves deeper into the performance of five prominent large-cap funds in India over the past five years, analyzing their returns, risk metrics, and other factors to guide your investment choices.

Return on Investment

Our analysis starts with the most common performance metric – Return on Investment (ROI). All five large-cap funds under consideration delivered positive returns over both the one-year and five-year periods. The Quant Focused Fund  emerges as the leader with a five-year return of 22.27%, followed closely by ICICI Pru Focused Equity Fund  at 20.68% and Nippon India Large Cap Fund  at 17.96%. These returns are noteworthy, especially considering the overall market performance during this timeframe.

However, it’s important to remember that past performance doesn’t guarantee future results. Investors should not solely base their decisions on past returns.

Understanding Risk

While returns are undeniably significant, a complete picture requires considering risk. The Sharpe Ratio and Sortino Ratio are valuable risk-adjusted performance metrics. They measure a fund’s return relative to the level of risk undertaken. Here, the Quant Focused Fund  maintains its lead with a Sharpe Ratio of 2.97 and a Sortino Ratio of 4.75. These figures indicate strong risk-adjusted returns, meaning the fund generated a higher return compared to the additional risk it took on. ICICI Pru Focused Equity Fund  and Nippon India Large Cap Fund  also boast impressive Sharpe Ratios exceeding 2.8 and Sortino Ratios exceeding 4.6, signifying healthy risk-adjusted performance.

Alpha and Standard Deviation

Our analysis extends further with Alpha, which measures a fund’s ability to outperform a benchmark index. All the funds have positive Alpha values, indicating their success in generating returns above the benchmark. This is a positive sign for investors seeking funds that actively manage their portfolios to deliver superior returns.

Standard Deviation provides another perspective on volatility. It shows the range within which a fund’s returns can fluctuate. The Quant Focused Fund  has the highest standard deviation at 13.72, signifying slightly higher volatility compared to other funds. Investors with a lower risk tolerance may want to consider this factor when making their decision.

Expense Ratio: The Cost of Management

The Expense Ratio represents the annual fees charged by a fund to manage its portfolio. A lower expense ratio translates to a higher net return for the investor. Among the analysed funds, ICICI Pru Focused Equity Fund  and Nippon India Large Cap Fund  boast the lowest expense ratios at 1.77% and 1.61%, respectively. The Quant Focused Fund  has a higher expense ratio of 2.19%. While it delivers strong returns, investors should weigh these returns against the higher fees associated with the fund.

By understanding the various performance metrics and their implications, you can make informed choices and select the large-cap fund that best aligns with your investment strategy.

Elevate your savings strategy with our easy-to-use Angel One SIP Calculator. See the impact of consistent investing. Your future self will thank you. Start planning today!

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.