Largecap mutual fund schemes stage a comeback in 2017

Largecap mutual fund schemes hogged the limelight in 2017. Most mutual fund pundits were predicting a strong performance by largecap schemes since the last few years. Largecap schemes did not disappoint investors in 2017. The largecap category returned 26.76 per cent in one year.

However, many investors continue to be fascinated by mid and smallcap schemes because of the eye-popping returns offered by them in the last couple of years. The midcap category returned 35.35 per cent in the last one year and the smallcap category returned 45.73 per cent in the same time frame.

According to mutual fund managers and advisors, largecap schemes might continue to offer attractive returns even in the coming year. “Given the stage of growth in the Indian economy, even large companies offer good growth potential,” says Neelesh Surana, CIO-Equities, Mirae Asset India.


However, this doesn’t mean large stocks are available cheap in the market. Though not as high as mid and smallcap schemes, even largecap valuations are stretched. Mutual fund advisors believe that markets are headed for a testing time and laregcap stocks are likely to hold up better than their smaller counterparts. This is why many of them are recommending laregcap equity mutual fund schemes to their clients.

Many mutual fund investors continue to cold shoulder largecap schemes because of their comparatively lower returns. Many of them believe they are better off in a mid or smallcap scheme which might offer superior returns in the coming year. This could be a costly mistake. According to mutual fund advisors, these investors haven’t seen a bad phase in the market and they have no idea how much mid and smallcap schemes would suffer in such a phase. Mutual fund advisors believe that the new investors mostly wanted to invest in small and midcap schemes and some wanted to play the sectors which were performing well.