The equity markets have been volatile and in a corrective mode for the past three months with a mix of factors at play – fears of US trade tariffs, FPI selling, valuation concerns, slowing GDP growth and underwhelming corporate results.
In the broader markets, only large-caps have relative valuation comfort, more so after the recent correction.
For investors with a medium risk appetite, large-cap funds are ideal investment vehicles from a long-term perspective. Without taking high risks and maintaining relatively less volatile portfolios, large-cap funds are ideal avenues for being in the core part of investor portfolios.
In this regard, Edelweiss Large Cap is a fund that investors can consider from a long-term perspective of at least 7-10 years.
The fund has a track record of over 15 years and has delivered healthy benchmark and category-beating returns over the long term.
Taking the SIP route for taking exposure to the fund would help average costs and reduce portfolio volatility.
Robust outperformer
Large-caps in general have struggled to beat the benchmark Nifty 100 TRI or the BSE 100 TRI, especially after market regulator SEBI brought in rigorous categorisation and investment norms. However, Edelweiss Large Cap has consistently done better than the the Nifty 100 TRI over the past decade or so.
In the past 1-year, 3-year, 5-year and 10-year timeframes, the fund has delivered 15.8 per cent, 15.2 per cent, 18.7 per cent and 14.3 per cent, respectively, on a point-to-point basis. The scheme outperformed its benchmark by 2-3 percentage points across timeframes.
When five-year rolling returns over the period January 2013 to January 2025 are considered, the fund has delivered mean returns of 14.3 per cent. For comparison, the Nifty 100 TRI delivered average returns of 13.3 per cent.
Also, in the period mentioned above, on a 5-year rolling basis, the scheme has beaten its benchmark Nifty 100 TRI over 94 per cent of the time. It has delivered more than 12 per cent over 78 per cent of the time during this period and more than 15 per cent for nearly 47 per cent of the time.
The fund’s SIP returns (XIRR) over the past 10 years are healthy, at 16.3 per cent. An SIP in its benchmark Nifty 100 TRI would have returned 14.7 per cent over the same period.
All return figures pertain to the direct plan of the fund.
Edelweiss Large Cap fund has an upside capture ratio of 100.2, indicating that its NAV rises almost as much as the benchmark during rallies. The scheme has a downside capture ratio of 81.3, suggesting that the scheme’s NAV falls much less than the Nifty 100 TRI during corrections. A score of 100 indicates that a fund performs in line with its benchmark. These observations are based on data from January 2022-January 2025.
Steady sector mix
Edelweiss Large Cap invests around 85 per cent (can go higher to 89-90 per cent at times) of its portfolio in large-cap stocks. About 10-15 per cent of its holdings is in mid-caps, a strategy that most schemes in the category resort to. The mid-cap holdings have aided the fund’s outperformance.
The exposure in large-cap stocks is reserved for the top few companies in any given sector.
There is a slight value tilt to the fund’s top holdings, though growth is also given considerable prominence. Most of the picks are from the Nifty 100 index.
Firms in the financial services space have always been the fund’s top holdings, with banks gaining the most prominence. IT software has also figured among the top holdings of the fund, though healthcare has now become the second largest segment held by the fund. Automobiles and auto parts have seen increased exposure in recent portfolios. Surprisingly, FMCG companies, which have witnessed anaemic growth and have been shunned by the markets, now figure among Edelweiss Large Cap fund’s key holdings. A stiff 25 per cent correction in some of the key stocks in the segment may have made these picks attractive.
The fund generally holds around 70 stocks in its portfolio, with exposure to individual firms rarely crossing 4 per cent barring the top few holdings.
Edelweiss Large Cap remains invested to the tune of 95-98 per cent and rarely holds high cash and debt positions.
The fund is suitable for investors with a medium risk appetite. Investors saving for financial targets that are 7-10 years away can opt for the systematic investment route.
The scheme can be a key component of an investor’s large-cap portfolio.
Why invest
Delivered 15.8%, 15.2%, 18.7% and 14.3%, respectively in 1-year, 3-year, 5-year and 10-year timeframes
On a 5-year rolling basis, beat benchmark Nifty 100 TRI 94% of time
XIRR over past 10 years at 16.3%
