There is a common perception about mutual funds that large-cap funds are safe and do not fluctuate much. But recent figures tell a different story. Investors often think that investing money in blue-chip companies will always be profitable, but the reality is that even big stocks are not untouched by market fluctuations.
According to data from the Association of Mutual Funds in India (AMFI), out of 33 large-cap funds, 28 funds could not manage even 5% returns in the last one year. Of these, 10 funds have given negative returns, falling as low as (-) 8.34%. Surprisingly, only 1 large-cap fund has shown double-digit growth – Motilal Oswal Large Cap Fund (19.42%).
This clearly shows how severe the recent market correction has been. It also proves that large-cap funds are not completely risk-free. Yes, indeed, large-cap funds usually provide stability compared to small-cap and mid-cap funds, but this does not mean that there is no possibility of loss in them. Therefore, instead of investing just by looking at the name, do smart research, adopt proper asset allocation, and make decisions keeping in mind the market conditions.
Also read: 5 Top Performing Equity Mutual Funds Amid the Market Correction
Here is the list of 10 worst-performing large-cap funds that have given negative returns — sorted from lowest to highest 1-year return:
1. Quant Large Cap Fund (-8.46%)
2. Bank of India Bluechip Fund (-8.34%)
3. JM Large Cap Fund (-5.93%)
4. ITI Large Cap Fund (-4.11%)
5. Groww Large Cap Fund (-3.36%)
6. Union Largecap Fund (-2.91%)
7. Taurus Large Cap Fund (-2.20%)
8. PGIM India Large Cap Fund (-0.86%)
9. HSBC Large Cap Fund (-0.44%)
10. Sundaram Large Cap Fund (-0.16%)
(Data: AMFI)
Risks and benefits of investing in large-cap funds
Risks:
Low return potential: Large-cap funds do not grow as fast as mid-cap and small-cap can.
Impact of market correction: Although these funds are considered safer, the recent decline makes it clear that large stocks can also come under pressure.
Long investment horizon is important: Large-cap funds are less likely to give quick profits, so it is important to invest in it with patience for a long time.
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