Pros & Cons of Investing in Mirae Asset Large Cap Fund

The Indian equity market currently seems nervous due to Trump's tariff tantrums, geopolitical tensions, FII flows turning negative, and the US Federal Reserve as well as the RBI, highlighting inflation risk.

With headwinds and volatility in play, you need to make a rational choice among a wide range of mutual fund schemes available.

At a time when valuations are elevated in midcaps and smallcaps, investing in the largecap segment of the market seems to be better idea. The PE of the Nifty 100 index, which represents largecap companies, is currently below its 5-year average.

To diversify across largecaps, it makes sense to consider largecap funds. As per regulatory guidelines, they are mandated to invest a minimum of 80% of their assets in the top 100 companies by market capitalisation.

Many of these companies have economic moats and are run by mostly efficient and ethical managements.

Moreover, many are financially sound, well-established, and generally, are market leaders in their respective sectors. For this reason, they are also referred to as bluechips.

Largecaps are known to grow wealth steadily, offering better stability compared to midcaps and smallcaps. For this reason, a large cap mutual fund may be held in the 'Core' part of an equity mutual fund portfolio.

That said, investment in a large cap fund is not without risk. You need to have a high-risk appetite and a long-term horizon of around 3-5 years.

In this editorial, we will take you through the pros and cons of investing in Mirae Asset Large Cap Fund.

This scheme was launched in April 2008 as Mirae Asset India Equity Fund, investing across market capitalisation and sectors.

But after the mutual fund categorisation and rationalisation came into effect, it was rechristened as a large cap fund in May 2019.

Its investment objective is to generate long-term capital appreciation by capitalising on potential investment opportunities by predominantly investing in equities of largecap companies.

Its AUM has increased over the years, and as of June 2025, it is managing assets over Rs 407 billion (bn).

How Does Mirae Asset Large Cap Fund Invest Your Money?

The scheme invests 80% of its total assets in equity and equity-related securities of largecap companies, 20% in other than largecap companies, and up to 10% in debt & money market instruments.

When investing, the fund does not have any bias towards a particular theme, sector, or style for picking stocks.

It finds investment opportunities resulting from Indian economic growth and its structural themes. A combination of top-down and bottom-up approaches is followed to pick stocks.

It aims to participate in high-quality businesses where there is growth at a reasonable price. It tries to identify companies that have sustainable competitive advantages, i.e. stocks that have strong pricing power and are sector leaders.

Over 80% of the fund's total assets are consistently held in largecap companies.

The fund holds stocks for an extended period with conviction. That said, it also alters its investment strategy depending on various external factors.

As a part of its strategy, the fund also participates in derivative instruments (up to 50% of its net assets) for both hedging and non-hedging purposes, but in line with its investment objective.

Should investors consider this fund?

Let's discuss the pros and cons of investing in the fund.

Pros

#1 Diverse Portfolio

Currently, the fund has 80 stocks in its portfolio, of which 85.7% of its assets are in largecaps, 7.6% in midcaps, and 5.7% in smallcaps. The remaining around 1% are in units of domestic mutual funds and cash & cash equivalents.

The top 10 stocks comprise 49.2% of the portfolio and include names such as HDFC Bank (9.8%), ICICI Bank (7.3%), and Infosys (5.7%), among others.

Among the diverse range of sectors, the top 3 are banks, IT, and FMCG, which comprise 47.3% of the portfolio.

With a diverse portfolio, the fund avoids concentration and liquidity risk, which helps in dealing with market uncertainty.

Moreover, the portfolio is held with conviction, as revealed by the low portfolio turnover ratio, which has not exceeded 50% since it was recategorised as a large cap fund.

#2 Process Driven Fund House Keeps Risk Comparatively Low

Mirae Asset Large Cap Fund is from a fund house following robust investment processes and systems.

The portfolio construction is not left to the whims and fancies of the fund manager. A team-based approach is followed to achieve objectivity.

This ensures that portfolio construction is free from bias and prudent investment principles are followed.

With a diverse portfolio, the fund has managed to keep risk under check. This is evident with the standard deviation (SD) of 11.56 which is below the category average and the benchmark, the Nifty 100 - TRI.

Scheme Name	Absolute (%)	CAGR (%)			Risk Ratios
	1 Year	3 Years	5 Years	7 Years	SD Annualised	Sharpe	Sortino
Mirae Asset Large Cap Fund	15.97	13.45	18.72	13.99	11.56	0.25	0.54
Category Average*	17.45	15.96	19.59	14.19	12.13	0.26	0.56
NIFTY 100 - TRI	15.84	14.27	19.11	13.96	12.56	0.23	0.50

Source: ACE MF

Cons

#1 Faltering on Returns

Despite holding a portfolio of certain quality stocks, the fund has lagged in delivering returns to its investors over longer periods compared to some of its peers.

In the last 3 years and 5 years, the fund delivered a compounded annualised rolling return of 13.5% and 18.7%, respectively.

It has underperformed the category, while the Nifty 100 - TRI, clocked a compounded annualised rolling return of 14.3% and 19.1% over 3 years and 5 years, respectively.

This is mainly because a large portion of the corpus of the fund isn't performing. Thus, the fund has been in the bottom quartile of performance.

The cyclicality of the stocks in the market has contributed to the fund's underperformance.

#2 Dull Risk Adjusted Returns

While the fund has been able to limit its risk (as denoted by the SD of 11.56), the faltering returns have weighed down on the risk-adjusted returns.

Both the sharpe ratio (0.25) and sortino ratio (0.56) are muted and below the category average, even though better than that of the benchmark.

In short, Mirae Asset Large Cap Fund is a low-risk, low-return proposition.

Conclusion

Mirae Asset Large Cap Fund was once among the popular and top-performing large cap funds.

In the last couple of years, its performance has come under pressure due to a large section of its portfolio not moving favourably.

While the fund has held the portfolio with conviction, it has also paid a price by not swiftly moving out of those stocks, which has weighed down on its performance.

Just limiting downside risk is not enough; what you need as an investor is decent risk-adjusted returns.

Choose your mutual funds thoughtfully.

Happy investing.

#Table Note: Data as of 5 August 2025
Rolling period returns are calculated using the Direct Plan-Growth option. Returns over 1 year are compounded annualised.
Standard Deviation indicates total risk, while the Sharpe Ratio and Sortino Ratio measure the Risk-Adjusted Return. They are calculated over 3 years, assuming a risk-free rate of 6% p.a.
*All large mutual fund schemes are considered to compute the category average returns.
Please note that this table represents past performance. Past performance is not an indicator of future returns.
The securities quoted are for illustration only and are not recommendatory.
Speak to your investment advisor for further assistance before investing.
Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.

Disclaimer: This write-up is for information purposes and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.