After having combed through the mutual funds data for the month of June, it can be inferred that large cap mutual funds saw the maximum outflow of ₹2,049 crore.
This is the highest outflow in any category of equity mutual funds, followed by focused funds which saw an outflow of ₹1,018 crore, and index funds that witnessed an outflow of ₹905 crore. ELSS funds, during this period, saw an outflow of ₹474 crore.
| Month | Inflow/ outflow of large cap funds ( ₹crore) |
| Jan | 715.98 |
| Feb | 353.8 |
| Mar | 911.2 |
| Apr | 52.63 |
| May | -1,362.2 |
| June | -2,049.61 |
(Source: AMFI)
Steep outflow
Large cap funds witnessed a steep outflow of funds in the recent past. In the first three months of this calendar year, large cap funds saw an inflow of funds to the tune of ₹1,979 crore. In the past one month alone, the outflow of ₹2,049 crore surpassed the inflows of the first three months.
One would wonder why is the outflow from large cap funds so steep, and whether it is safe to invest in them in the near future. On this, financial experts argue that the reason for increase in outflow is that the broader market benchmarks are hovering at their all-time highs.
“Since the equity markets have been trading at their all-time high, a number of investors have redeemed their investments, triggering the outflow in the large cap schemes,” says Amol Joshi, founder of Plan Rupee Investment Services.
“The market has rallied strongly on the last three months leading to all time highs. Historically this has lead to return chasing where investors switch from low beta funds like large cap and index funds to high beta funds like small cap and mid cap funds. We are seeing similar rotation now as well,” says Gaurav Rastogi, CEO & founder, Kuvera.in
Large cap funds
A mutual fund scheme that invests a minimum of 80 percent of its assets in large cap stocks is known as large cap mutual fund. Large cap stocks are the securities of top 100 companies listed on the stock exchange and ranked as per the market capitalisation.
There are 32 schemes in the category of large cap mutual funds, with total assets under management (AUMs) of ₹2.59 lakh crore as on June 30, 2023.
Investing in a large cap stock, and thereby mutual fund, is considered safe and secure because of the stability these stocks offer.
Although it is argued that these funds offer less scope of growth when compared with their small cap counterparts, but they tend to comprise a significant proportion in a rational investor’s portfolio simply because of the safety they offer.
“Despite some resorting to profit booking, large investors particularly FIIs tend to place big bets on large caps,” says Sridharan S., founder of Wallet Wealth.
Large cap funds have delivered a return of 17.89 percent in the past five years, and 22 in the past three years, as per MorningStar data as on July 11.
To sum up, investors have an incentive to exit the large cap funds since the markets are trading at high levels, however, some still opt for them for the stability they offer to the portfolio.
